Friday, July 15, 2011

Air Zimbabwe struggling for survival

Air Zimbabwe is struggling for survival as the airline requires at least US$20 million to keep operations running as reported recently.  Transport, Communications and Infrastructure Development Minister Nicholas Goche on Monday said the money would be used to cover the costs of fuel and other expenses, according to Zimbabwe's Herald newspaper. The amount did not include US$8 million for retrenchment packages and other expenses.  "If we get a minimum of US$20 million, that would be enough for the airline to clear its short term expenses like buying fuel when they want to fly while we, as shareholders, are looking for other strategies to ensure they will remain viable," he said.  Goche noted that, "it is very difficult to attract an investor because of its balance sheet and debt and there is still no strategic partner that has come to the rescue of Air Zimbabwe." "The Air Zimbabwe balance sheet is very bad and not attractive to anyone. The revenue generated by the company does not match the overheads," Goche told local media recently.  VOA reported that experts have dismissed Goche's figure, saying that the money would not be enough to save the airline. Another problem is that the government cannot spare US$20 million to rescue Air Zimbabwe as it is on a shoestring budget and already sliding into deficit.  Aviation expert Guy Leitch of South Africa's Fly Magazine told VOA that Goche's proposals to the parliamentary transport committee do not make sense.  Some good news came for the airline on June 10 when Zimbabwe's civil aviation authority (CAAZ) allowed Air Zimbabwe's three Boeing 737-200s to take to the air again. They were grounded in April after the CAAZ said they had reached their flying limits. The aircraft serviced the Harare-China and Harare-London routes.  Nevertheless, the national carrier remains in dire straits as it has more than US$100 million of debt.  Air Zimbabwe has been hit by a number of crises recently. Air Zimbabwe's flights came to a halt for a week starting May 18 as the aircraft it was leasing from Zambezi Airlines was withdrawn over an unpaid US$460 000 debt. In March Air Zimbabwe leased a Boeing 737-500 from Zambia's Zambezi Airlines.  On May 15 the International Air Transport Association (IATA) suspended Air Zimbabwe from flight booking services as Air Zimbabwe had not paid US$280 000 of the debt it owes the organisation. Air Zimbabwe continued flying, using its own booking facilities. More than 50 percent of the airline's customers book through travel agents.  Air Zimbabwe is crippled with more than US$100 million of debt, some of it accrued from a nearly month long strike between March 22 and April 20, the second to hit the carrier in the last year. Pilots were protesting unpaid salaries and allowances dating back to February last year, amounting to approximately US$9 million.