Air Zimbabwe goes on Sale
HARARE – The embattled Zimbabwe's state-owned airline is considering opening up to private shareholders in exchange for a huge cash injection needed to avert its collapse, and it plans to cut up to 500 jobs, according to chairman Jonathan Kadzura.\r\n
Air Zimbabwe, which government officials say currently receives $2 million (R16m) a week from state coffers, is a perennial loss maker weighed down by an ageing fleet, debt and a severe economic crisis.
Kadzura said on Wednesday that Air Zimbabwe and the government were in talks to find ways of urgently streamlining and recapitalising the business.
"It’s either you adapt or die," Kadzura said.
Jonathan Kadzura is a former officer in the state spy agency, the CIO and he is well known for running Harare’s RoadPort foreign Currency black market through his links to the Reserve Bank.
An investor’s prospectus says Air Zimbabwe requires $750m to renew its fleet and to install a hangar fire protection system. The government would give up a 60 percent stake in the airline in exchange for the funding.
The country’s national carrier said Tuesday it will cut 500 jobs, one-third of its workforce, in a bid to prevent the embattled airline from going under.
Nearly a decade of economic and political crisis has seen annual passenger numbers for the struggling airline drop from a peak of one million in 1996 to just 300,000 now, the company said.
The company currently has a US$30 million debt, and has asked the government to sell its stake in the airline in a bid to raise desperately needed cash from private investors.
"If we do not do anything about it, the business will collapse and it will be very unfortunate if this happens," Chikumba told AFP.
Last year at the height of the country’s hyperinflation, which officially hit 231 million percent but was believed many times higher, Air Zimbabwe was forced to sell tickets in the virtually worthless local currency.
That left the airline struggling to pay its membership fees with the airline regulation body, the International Air Transport Association (IATA), while it couldn’t pay landing fees at London’s Gatwick Airport.
Chikumba was hopeful that the unity government formed in February between President Robert Mugabe and his erstwhile rival Prime Minister Morgan Tsvangirai would bring economic stability and improve the business environment.
"We are positive that the political atmosphere that has been created will bring potential investors into the airline and the country," said Chikumba.
The route has since been closed, together with Kinshasa and Luanda, while the airline has concentrated on busy routes to South Africa, Britain and Zambia.
The company has also been hit hard by the national brain drain as experienced personnel such as engineers and pilots are poached by rival carriers in the region and Europe.
Chikumba said the retrenchment was a way of trimming the company’s workforce to match the reduced business climate, while retaining staff with the right skills.
"The standard economic life span of an aircraft is about 15 years. Maintenance costs are high, spares for these aeroplanes are scarce," Chikumba added.
The political crisis in the southern African nation has decimated key industries like mining and agriculture, and run the country’s education and health sector to the ground.
Once described as a model economy and a regional breadbasket, Zimbabwe’s political crisis drove the economy to a near collapse with severe shortages of basic foodstuffs like sugar and cooking oil.
Mugabe has blamed Zimbabwe’s meltdown on sanctions imposed by Britain and other Western nations, but his opponents accuse his government of widespread economic mismanagement.