Zimbabwe takes over national airline’s $300mln debt to facilitate foreign investment – Mpofu

Zimbabwe takes over national airline’s $300mln debt to facilitate foreign investment – Mpofu

HARARE, May 6 (The Source) – Troubled airline Air Zimbabwe is in talks with several potential strategic partners after government agreed to take over its toxic $298 million debt, transport minister, Obert Mpofu said on Wednesday.

The talks will be finalised before the third quarter of this year, Mpofu told The Source at the commissioning of a medium range Airbus A320, the first of the two which officials said the airline is leasing from Sonangol, Angola’s parastatal responsible for managing its oil and gas reserves.

“We have some interest from some reputable airlines which have shown keenness to partner Air Zimbabwe, especially when we clean up our balance sheet, which has been of great concern to potential investors,” said Mpofu.

“Government has undertaken to warehouse that debt and let the new arrangement start on a clean slate.”

Of the debt, $272 million is local.

While government has maintained an empowerment policy which dictate that 51 percent shareholding be in local hands, Mpofu said the state could compromise on the final deal.

“We would be looking at several possibilities out of which a compromise one would be selected and this would be an outcome of negotiations between the two parties,” he said.

Government was also talking to other airlines for purchasing or lease to buy arrangements for other aircraft, he added.

Acting chief executive, Edmund Makona told The Source that the A320 160-seater aircraft would gives Air Zimbabwe a “competitive advantage in terms of fuel and operationalisation.”

“It can help transform Air Zimbabwe into an entity that can actually sustain its operations. Fuel costs constitute between 36-40 percent of operational expenses for the airline. Once we reduce those it means we are able to sustain the airline,” he said.

The airline planned to reintroduce double frequencies to Johannesburg, South Africa and is targetting increasing routes to include East Africa.

There are also plans to resume flights to Dubai, which ceased in 2011, although Makona said this would include a technical stopover, with feasibility studies currently ongoing.

West Africa is also another possibility the airline was considering, he added.

On more aircraft for the airline, he said: “We are looking at fleet modernisation but we also want to ensure that the current fleet is fully utilised but on certain routes. This could entail Air Zimbabwe buying or leasing smaller aircraft for local routes.”

The airline could retire or lease its expensive and old 737-200 planes, although it planned to keep using the long range 767-200ER planes.