Govt to take over Air Zim US$140m debt

By Innocent Ruwende

Government is set to take over Air Zimbabwe’s US$140 million debt, although with plans to liquidate it over time, while working on cutting the airline’s staff and finding a strategic partner to buy into the national airline.

Transport, Communications and Infrastructural Development Minister Nicholas Goche said Cabinet had agreed to partially dispose of the National Handling Services.

“At its last meeting on Thursday 20 October, 2011, Cabinet discussed challenges faced by our national airline, Air Zimbabwe Holdings (Pvt) Ltd and resolved that, Air Zimbabwe as a strategic Government asset and brand, needed to be preserved and supported as a going business concern.

 “To this end, Government must assume Air Zimbabwe’s current debt (currently standing at US$140 million) and ring fence the same.”

Minister Goche said once a strategic technical partner was found, proceeds from its equity contribution will be used to liquidate the debt. He said Cabinet had agreed that there was an immediate need to right size the national airline into a lean and effective organisation.

So Airzim would soon start retrenching some of its workers.

“Efforts to partially dispose of the National Handling Services should be pursued with urgency now in order to secure some financing from within the airline in order to avoid overburdening Treasury.

“In order to realise additional financing, there is urgent need to find a strategic partner for the national airline through private placement, that is, directly approaching would-be interested investors and forming a joint venture partnership,” he said.

Minister Goche said the joint venture will take over Airzim’s assets for which it would pay. Proceeds from the joint venture, the minister said, will be used to retire some of the debts.

“In the interim, Government continues to closely monitor and meet Air Zimbabwe’s operational requirements having particular regard to the urgent need for the airline to pay its third quarter aviation insurance.”

He said the airline urgently needed to rejoin the IATA bank settlement plan and the IATA clearing house as well as pay ASCENA and other aviation service providers.

The airline has been crippled by relentless problems, among them strikes that at some point forced the company to hire planes to take care of its travellers. In May this year, the International Air Transit Association ceased allowing travel agents to book flights on the airline over an unpaid debt. The Herald