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AIR Zimbabwe is broke and requires a bailout of about $600 million which will take care of its legacy debt as well as capitalisation requirements to implement its turnaround strategy, Parliament heard on MondayWhile the airline has failed to produce audited accounts since 2009, its new general manager for finance Nigel Chimudzi told the Parliamentary Portfolio Committee on Transport and Infrastructure Development that the national flag carrier was bankrupt.
“The airline is actually insolvent,” Chimudzi told the committee. The good thing is that government is involved but if it was a private company, the directors should have been prosecuted for reckless trading.”
Airline management told the committee that a $300 million legacy debt was choking any revival efforts, while $260 million was required in fresh capital.
The Air Zimbabwe board and management team gave a gloomy picture of the state of affairs at the airline where there are running battles with creditors while trying to maintain cash flows when the more than 20-year-old long haul planes are not only fuel guzzlers but require constant servicing.
Acting chief executive officer Edmund Makona described the company work schedule as more of fire-fighting.
“The revenue that we’re making today is being used to fund the past which isn’t adding any value to the airline,” he said, adding that the airline was constantly rushing to government, which is the sole shareholder, for protection or temporary bailout as creditors were day in day-out taking measures to recover their dues.
The firm required millions to service its planes including an MA60 which was involved in an accident with pigs on the runway years ago.
But Chimudzi said in some cases it was better to get rid of the planes than to try and repair them.
Makona said the Air Zimbabwe Airbus A320 plane would be in service from the end of this month and would be used on the Harare-Johannesburg route replacing the fuel guzzling Boeing 767 which he said was for long haul flights such as the suspended Harare-London route.
With 518 employees and 10 planes in its possession but only three currently flying, acting Air Zimbabwe board chairman, Abdul Eric Harid said it would be nearly impossible to make the airline viable unless the debt issue was resolved.
“We’re preparing a validation of the debt and they (government) are taking it over,” he said.
“When the assumption of the debt is done, we’ll then start focusing on issues but until that’s done, it’ll be very difficult.”
Makona said if the government was unable to inject fresh capital into the airline, it should seriously consider a joint venture, public private partnership or equity partnership to rescue the situation.
The committee expressed reservations about the seriousness of the airline’s board and management in turning around its fortunes arguing that they did not have an effective turnaround strategy.
But Harid insisted they were up to the task.
“We’re the right team, we’ve managed to pinpoint the issues at Air Zimbabwe and we know what must be done.” — New Ziana
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