Air Zimbabwe privatization under threat

Published: 25 July 2017

Government's plans to privatise national carrier, Air Zimbabwe, may be in for a bumpy ride amid indications that the airline's major creditors are moving to stop the transition.

Insiders who spoke to the businessdaily over the weekend said while government had made a provision for the assumption of Air Zimbabwe's over $334 million debt, major creditors were not confident of government's ability to honour the obligations.

"The privatisation is definitely going to happen, no doubt, this has been in the works for years. However, crucial creditors are not very keen on receiving Treasury Bills (TBs) which government will likely use to settle the airline's debt…

"This is especially true in cases where the paper has a late maturing date… Yes, government has not really defaulted on TB obligations, but the amount which local banks presently hold is becoming cause for concern… So, creditors are not too keen," an insider said.

A TB is a short-term debt issued and backed by the full faith and credit of government. These debt obligations are issued in varying maturities.

The airline - on the cusp of launching a new business model - is reportedly in the process of being restructured to create a new airline business free from legacy issues dogging it.

"The likely position is this route and unless government really pulls a miracle with the creditors, the plan may end up in litigation," the source said.

As part of the process, it is understood that the parastatals also intends to find a win-win solution to deal with its irate creditors - some of whom have been unsuccessfully trying to retrieve their dues for over four years - so that they do not harangue the new operation.

Already, Cabinet has directed Transport minister, Joram Gumbo to find a technical partner for Air Zimbabwe to ensure its revival with Gumbo recently confirming that they are working on "refreshing all" aspects of Air Zimbabwe's operations, in preparation for the anticipated take-off.

There are, however, a lot of legal issues involved to get around these issues, which are currently under consideration, with the businessdaily reliably informed that major creditors are lining up to negotiate for a beneficial outcome or block the transition.

This comes after a YouTube video of a Zimbabwe Airways branded Boeing 777 taking off in Malaysia emerged last month, sparking debate about the future of Air Zimbabwe.

Research conducted by businessdaily shows the new airline secured ex-Malaysia Airlines B777-200 (ER) 9M-MRP (msn 28421), which conducted air tests at Malaysia's Sultan Abdul Aziz Shah Airport a fortnight ago.

People briefed on the matter said the plane - registered in Malaysia - was part of a new partnership deal where Malaysia Airlines will initially provide Zimbabwe Airways with four aeroplanes, which were retired last year, with two of the Boeing 777s expected in the country any time soon.

According to the sources, the new flag carrier would once again be open to exploring such arrangements noting that this operation was what pre-empted the latest infrastructure investment at Victoria Falls International Airport.

Aviation experts, contend that while the airline may move to liquidate and form a new company, this route is not without its complications.

"Creditors may conjure up the precedent of an embarrassing episode in which the Zifa attempted to cunningly dribble past their creditors by dissolving the association to recover their money from AirZim," the experts said.

AirZim management recently professed ignorance of the new company and impending liquidation.

"We have nothing to do with the new company, Zimbabwe Airways, and as of now we are still operating as Air Zimbabwe. If there are any changes in the future we will let you know," AirZim public relations executive Hazel Zisanhi told the businessdaily recently.

Gumbo also dismissed the national flag carrier's liquidation as mere speculation.

"My position, which has been approved by Cabinet, is that I am looking for investors to partner Air Zimbabwe and that has not changed," he told the businessdaily.

"As for Zimbabwe Airways, I cannot comment on that as it's a private company and we cannot stop people from registering companies with names of their choice," he said, adding that he will make an announcement should there be any developments at AirZim," Gumbo said.
- dailynews

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