Maputo — The air company Moçambique Expresso (Mex), which is a subsidiary of Mozambique Airlines (LAM), has decided, as of 31 August, to suspend all operations, involving domestic and regional flights, as result of conflicts with its parent company.
The announcement of the suspension of operations came in a letter signed by the Mex managing director, Faustino Massitela, cited by the Portuguese news agency Lusa.
Mex operates three Embraer 145 aircraft to various destinations in the country and the region, at the service of LAM, which is facing severe financial difficulties. In April, these led the government to place it under the management of South Africa's Fly Modern Ark (FMA).
"As well as providing LAM with medium-sized aircraft to meet the LAM timetable, Mex provides ground handling and various other services. From all these services, Mex only receives the equivalent of 200,000 dollars, which is used to pay part of the staff's salaries', says Massitela's letter.
"The failure to channel money to Mex puts the company in a situation of lack of liquidity to honor its commitments to suppliers, putting the company at risk of closing down', it added.
The same letter warns that since 1 June, LAM has seen "a substantial reduction in the use of the Mex fleet, which compromises the company's ability to generate revenue to support its costs, as well as underuse of available financial resources.'
In addition, the company "has been accumulating debts with suppliers whose participation in Mex's operations is vital for the continuity of the company, in this case associated with engines and maintenance by Rolls-Royce, Embraer and American General Supplies'.
"It is our opinion that LAM and MEX, involving the FMA, must find an urgent solution to the situations referred to here. Failure to resolve these issues puts Mex in a situation where it could cease operations at any time', the managing manager warned in the same letter.
One of Mex's debts is to the Brazilian aircraft company Embraer, which it owes almost 1.2 million dollars. The Mex management has acknowledged that, without resolving this debt, the company will be unable "to receive or request any service or technical support from Embraer".
FMA claims that it has stabilized LAM. "With regard to debt restructuring, at the moment, after three months, we have managed to reduce the debt by 61.6 million dollars', said Sérgio Matos, a representative of FMA, at a press conference in Maputo last week.
When FMA took over management of the state-owned airline in April, LAM had an estimated debt of around 300 million dollars, according to figures provided at the time.
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Sérgio Matos said that the reduction in creditor charges was the result of "correct entries of transactions in accordance with international accounting standards, generally acceptable accounting practices and the national treasury's accounting guidelines.'
Matos revealed that LAM is in negotiations with the manufacturer Boeing for the reimbursement of 23 million dollars resulting from the pre-payment for a new aircraft that was never delivered to the Mozambican carrier.
Although LAM has emerged from insolvency, the carrier needs more aircraft to ensure an operation that allows it to pay off its high debt and generate profits, noted Matos.
The FMA says that it has managed to get LAM to fulfil its fleet maintenance requirements imposed by international regulations and contain the costs inherent in this service.
