THE government will assume responsibility for Air Zimbabwe’s $140 million debt in a bid to help the technically insolvent flag-carrier back on its ‘wings’, Transport Minister Nicholas Goche has said.
The airline has been crippled by numerous operational problems including mounting debts, ageing aircraft, undercapitalisation and labour disputes with key staff.
Goche said the government had agreed to takeover the debt and help find the company a technical partner.
“Last Thursday Cabinet … resolved that, Air Zimbabwe as a strategic Government asset and brand, needed to be preserved and supported as a going business concern,” Goche told The Herald.
“To this end, Government must assume Air Zimbabwe's current debt (currently standing at US$140 million) and ring fence the same."
Air Zimbabwe chief executive, Innocent Mavhunga recently urged government to help liquidate the airline’s huge debt pile comprising $112.7 million internal obligations and $25 million owed to institutions outside the country.
“Our cost of operating the business sits at about $6 to $7.5 million,” Mavhunga told Parliament’s Portfolio Committee on State Enterprises and Parastatals at a recent hearing.
Meanwhile, Goche said proceeds from the planned part-privatisation of the airline would be used to offset the debt while staff numbers would also be reduced to cut operating costs.
"In order to realise additional financing, there is urgent need to find a strategic partner for the national airline through private placement, that is, directly approaching would-be interested investors and forming a joint venture partnership," he said.
In addition, the National Handling Service (NHS), a subsidiary of the airline, would also be privatized to secure additional funds.
"Efforts to partially dispose of the National Handling Services should be pursued with urgency now in order to secure some financing from within the airline in order to avoid overburdening Treasury,” Goche said.