After failing to secure partnerships with reputable airlines put off by the $300m-plus debt at the struggling Air Zimbabwe (AirZim) and concomitant critical monthly financial losses, it remains to be seen how quickly the anchor shareholders of the stuttering carrier — the government — will come up with a rescue package.
The ongoing financial crisis exposes the airline to too many risks, especially as far as creditors are concerned.
Transport minister Joram Gumbo told the Daily News in an exclusive interview that at present government has no money to bail out the haemorrhaging AirZim, which this year alone made a loss of $24 million.
The forthright minister was blunt, there is nothing to expect in terms of reviving the national carrier unless government secures cash. For now, it’s a sinking company, he said grimly.
The stone-broke government had mooted an idea to pump cash into the airline but has so far failed to lend the pledged undisclosed support.
Such financial help will be timely in dealing with day-to-day expenses in the coming months, but the government simply does not have the cash.
The airline needs cash to amortise its long-term liabilities. But no one is willing to inherit this $300m legacy debt.
Gumbo said Cabinet approved the recapitalisation of AirZim and then tried to negotiate with at least 12 airlines which included two African airlines, Ethiopian Airways and Kenyan Airways but no one is willing to come on board.
What is needed now is commitment by shareholders on the long-term liabilities and financing the strategic plan.
The government urgently needs to come up with a “sweetener” to fast track the process of engaging a strategic investor with the expertise and deep pockets to tackle short and long-term issues.
The carrier’s capital has been seriously eroded. To assuage restless creditors, the shareholder need to move more aggressively to assume the $300m debt and let the new investors come in on a new slate.
The government needs to step in firmly because the airline’s financial health is critical to the performance of tourism and agriculture, especially horticulture exports. These two are crucial for the country’s economy.
With exports performing badly — the current account deficit worsening — an under-performing AirZim is a prospect the administration of President Emmerson Mnangagwa must be unwilling to countenance.
The airline is facing turbulent times. Gumbo remains optimistic, waxing lyrical about how the fundamentals for increasing revenues were still in place. DailyNews