Air Zimbabwe, a state-owned airline saddled with a $300 million debt, has turned down a rescue proposal from a Canadian aviation company.
By Brezhnev Malaba
The partnership deal with NEXTFLIGHTAIR would have seen the airline acquire seven more aircraft and grow its revenue to $136m within a year.
Four years ago, Zimbabwe’s flag carrier was forced to abandon its most lucrative route, Harare-London, after a British navigation company, Worldspan, obtained a court order to attach and auction Air Zimbabwe’s Boeing 767-ER jet over a $3m debt.
Negotiations between the technically insolvent airline and the British provider of travel technology have dragged on for four years, with no solution in sight. When four former Air Zimbabwe workers were recently granted a court order to attach the airline’s property over outstanding retrenchment packages to the tune of $160 000, the government moved swiftly to amend the finance act and make the parastatal immune to attachment of its property.
The former employees have now filed a court application challenging the constitutionality of ring-fencing the airline’s assets. They argue that Air Zimbabwe is really a private company and cannot be protected under the State Liabilities Act.
Tan Ahmed, the director of operations for NEXTFLIGHTAIR, says he has visited Zimbabwe three times in the hope of convincing the government of Zimbabwe and Air Zimbabwe to embrace the turnaround plan.
But the high-level discussions have reached a dead end.
A central component of the proposal is that the Canadian firm would be accorded rights to operate the profitable Harare-London and Harare-Guangzhou (China) routes.
The foreign company would foot all expenses and deliver a $500 000 monthly profit to Air Zimbabwe.
The turnaround plan says the Canadian firm, which has offices in Canada, Germany and Australia, would focus on reviving business on lost routes “by offering extraordinary customer service, reliability and safety with our two international direct flights to London and Guangzhou our major contributor to our cash flow”.
Operational aircraft would comprise two 35-seater turboprops for domestic routes, three 85-seater planes for the regional market and two wide-body jets for international routes.
Air Zimbabwe has small and mostly aged aircraft consisting of a Chinese-built Modern Ark MA60 turboprop, Boeing 737-200 (Advanced), Boeing 767-200 (extended range) and an Airbus A320-200.
In recent years, Air Zimbabwe’s woes have been compounded by the entry of both foreign-owned legacy carriers and low-cost airlines into Zimbabwe’s market.
The national flag carrier is now restricted to the Harare-Johannesburg route where it faces cut-throat competition from South African Airways, British Airways and fastjet, Africa’s largest low-cost carrier.
Air Zimbabwe plies domestic routes linking the capital Harare and the second city Bulawayo with the tourist resorts of Victoria Falls and Kariba.
The government has preserved the Harare-London route for Air Zimbabwe, and has declined all applications by foreign carriers to tap into the lucrative market.
Although Zimbabwean government officials declined to comment on the Canadian proposals, the Minister of Transport and Infrastructural Development, Jorum Gumbo, has confirmed that the hunt for an equity partner to rescue troubled Air Zimbabwe is still on.
Gumbo emphasised that there was little hope of a government takeover of Air Zimbabwe’s $300m debt.
Any rescue plan would have to involve an injection of funding by an equity partner.
“The position remains that the government has no money at the moment and Air Zimbabwe continues to struggle like any other organisation in the country,” said Gumbo.