TINASHE MAKICHI
Government has taken over Air Zimbabwe’s entire debt following its failure to secure a strategic partner, a Cabinet Minister said this week.
The failure to lure suitors resulted in the national airline failing to settle debts amounting to about US$341m.
Of this amount, 92% of it, which is US$314m, is local debt, while the balance is foreign debt.
The takeover of Air Zimbabwe debt by the government was confirmed this week by the Minister of Information, Publicity and Broadcasting Services, Monica Mutsvangwa who spoke at a post-Cabinet briefing this week.
Receivership of Air Zimbabwe was also extended by six months to June 2021.
“Owing to the strategic nature of the national airline, Cabinet resolved to assume the debt as well as the extension of the Air Zimbabwe Reconstruction period to June 30, 2021.
Air Zimbabwe Holdings (Private) Ltd and Air Zimbabwe (Private) Limited were placed under a Reconstruction Order to stay all legal action, attachment and rescue the national airline,” Mutsvangwa said.
According to Mutsvangwa, the reconstruction will provide for the payment of creditors as well as return the airline to profitability.
Air Zimbabwe is one of the country’s critical parastatals that the government wants revived given its central role in economic turnaround, particularly from the perspective of bringing tourists into the country, she said.
It is understood the flag carrier, which was placed under receivership in 2018, struggled to find a strategic partner because of its poor balance sheet and the huge debt overhang.
The airline’s balance sheet will be clean after the assumption of the debt by the government.
It is also understood that after failing to secure a strategic partner as well as failure to settle creditors, the judicial manager Reggie Saruchera of Grant Thornton went back to the shareholder citing the need to revive the airline using shareholder funds.
Government has identified tourism as one of the key sectors to help turn around the economy alongside mining and agriculture.
Analysts said the inability to repay its debt has left the national airline in a quandary as it is now stripped of its international aviation privileges.
It is estimated that Air Zimbabwe’s passenger numbers have gone down to about 230 000 per annum in the past few years, from a peak of about one million in 1996 with travellers looking for alternative airlines across all the domestic destinations.
In 2011, Air Zimbabwe’s Boeing 737-500 was impounded in South Africa after failing to settle a US$500 000 debt owed to Bid Air Services for ground handling services.
The Boeing 767-200 was also seized by American General Supplies in London over aUS$1.2m debt in the same year.
It is believed that is the reason why the airline pulled out of flying to London, one of the most lucrative destinations.
Air Zimbabwe was suspended from the International Air Transport Association, a situation which has made it difficult for Air Zimbabwe to fly to international destinations.
