Air Zimbabwe's Recovery ruined as Emirates Airlines Opens Harare Route

Emirates Airlines made its maiden flight to Harare Wednesday amid pomp and fanfare with the airline set to connect Zimbabweans to more than 100 destinations around the world and boost the country’s recovering tourism industry.

Several cabinet ministers, civil aviation officials and representatives of the airline attended the ceremony which critics said may well spell doom to the financially crippled Air Zimbabwe, which recently suspended some of its regional and international flights in fear of having its planes impounded by creditors.

Tourism Minister Walter Mzembi told VOA's Gibbs Dube that Emirates Airlines will operate five Zimbabwe flights a week, linking Harare with Zambia, Dubai, Europe, Asia and other international destinations.

Mzembi said the airline is expected to promote tourism in Zimbabwe which is anticipated to generate US$5 billion for the country by 2015.

The minister said the Emirates arrival was a wake up call for the struggling Air Zimbabwe which used to compete with more than 45 airlines that operated in Harare in the 1990s.

Economic analyst Masimba Kuchera observed that Emirates Airlines will help promote economic growth in Zimbabwe.

Air Zim ordered to pay former manager US$21 000

The struggling national  airline, AIR Zimbabwe has been ordered to pay its former manager Mercy Sanzira US$21 000 as a retrenchment package.

The airline entered into a voluntary retrenchment agreement with Sanzira, but failed to pay her and she took the matter to an arbitrator who ruled in her favour.

"The respondent (Airzim) is hereby ordered to pay to the claimant the full amount of US$20 764,03 at the prescribed rate of five percent per annum in three installments. The first payment should be made within seven days of this order.

"In addition, the respondent is ordered to pay on top of the retrenchment package US$843, which constitutes arrears in the differentials in salary and benefits during the time in question.

"The outstanding arrears are to be paid as a once-off payment within seven days of this order," ruled arbitrator P Mubvumbi.

Sanzira, through her lawyers, Matsikidze and Mucheche, has filed a chamber application at the High Court seeking to register the arbitration award.

On February 28 2010, Sanzira volunteered to go on retrenchment and the employer agreed to pay her US$20 000.

The retrenchment board approved the development but the airline failed to pay the package as agreed, prompting Sanzira to take the matter for arbitration.

The airline argued that it was facing serious cash-flow problems and that it was not able to pay the package.

Airzim sought to make the payment in nine months installments.

Sanzira strongly opposed the application on the basis that Airzim had earlier made some undertakings it failed to fulfill and that the money should be paid in full.

At the end of last year, the arbitrator granted the award trying to balance the interests of the two parties.

The award allowed Airzim to pay the money in three instalments.az

Air Zimbabwe Plane Impounded In London

Zimbabwe’s ailing state run airline, Air Zimbabwe’s woes worsened on Monday after one of its planes was impounded in London by a United States company.

Informed sources told Radio VOP that Air Zimbabwe’s long haul aircraft, a Boeing 767-200 known as Victoria Falls, was seized by American General Supplies upon landing at London’s Gatwick International Airport on Monday morning from Harare International Airport.

American General Suppliers secured a court injunction in the US that gave them the power to impound the aircraft over US$ 1, 2 million debts, according to a source on Monday.
“The AGS has impounded our Boeing 767 flight to London over unpaid debts. The plane was supposed to leave Harare on Sunday morning but it only left around 5PM because of the problems. Unfortunately it was then impounded and this is going to affect the workers who have not been paid over the past six months,” a senior staff member who requested anonymity told Radio VOP.
Air Zimbabwe acting chief executive officer, Innocent Mavhunga, could not give a comment over the issue saying he was attending to meetings.
“I can’t give you a comment at the moment because I am in meetings. You can try to get in touch with me after three hours,” said Mavhunga before switching off his mobile phone.
However, Air Zimbabwe board chairman Jonathan Kadzura confirmed that indeed the plane had been impounded due to non-payment of debts but blamed the situation on the Ministry of Finance and inclusive government.
“From our part we are very clear that this issue is political and we are hoping that the Finance Minister Tendai Biti will be able to see what we mean when we say he should support the parastatal. Surely the government has the capacity to pay the outstanding US$1,2 million debt,” said Kadzura.
“They (American General Supplies want their debt settled in full plus costs. We can see more attachments (of aircraft) coming,” said other sources, who asked not to be named as they are not authorised to speak on behalf of the airline.
The impounding of the aircraft follows the seizure of one of Air Zimbabwe’s plane, a Boeing 737-500 which was confiscated by South Africa’s Bid Air Services two weeks ago over a $500 000 debt for ground handling services.
Another international company, ASECNA has already secured a court ruling in France over which it could impound Air Zimbabwe's airplanes due to an overdue debt, while British Airport Transport and American General Supplies, a major supplier of aircraft spares to Air Zimbabwe, had warned that they could suspend services due to accumulating arrears.
Once rated as one of the best airlines in Africa, Air Zimbabwe has been run down due to successive years of mismanagement and inadequate funding.

Air Zim Airbus Deal In Trouble

Harare-Zimbabwe: The Zimbabwean government is battling to register two airbus planes purchased early this year from Paris, France through a closely guarded deal between the government and a Chinese-Angolan joint venture company, China Sonangol, it has emerged.

Impeccable sources from Air Zimbabwe told that the government as the main shareholder was having some registration challenges to ensure that the planes can get to Zimbabwe.

“The team that visited France last month came back empty handed despite earlier commitments that the first delivery would be made before September 20, 2011. What I see as the biggest challenge is the issue of ownership of the planes because the management of Air Zimbabwe have no idea where the money to buy the planes is coming from,” said a source.
There is a lot of money involved, according to the source, and the government is not coming clean of the whole deal.
“The other solution was to have the planes registered through the Netherlands but it’s still not yet clear. The planes are a result of a deal with China Sonangol but the government is very quiet on it,” said the source.
However Air Zimbabwe board chairperson Jonathan Kadzura denied that the planes were being bought through a deal with Sonangol and denied to shed light.
“This certainly has nothing to do with Sonangol and because of the little information that I have, I can’t give you any further details,” said Kadzura before hanging his phone.
Air Zimbabwe acting chief executive officer Innocent Mavhunga declined to comment on the matter maintaining the matter was a shareholder issue.
“That is a shareholder issue and I can’t comment on that. I do not have any comments to make on that matter,” said Mavhunga.
In 2009 the government of Zimbabwe signed five deals with China Sonangol worth US$8 billion that were said would help the country see investment pour into various key sectors of the economy.
Key sectors that were said would benefit under the deal include mining and housing, among others.
The package was a culmination of a meeting between President Mugabe and Chinese Premier Wen Jiabao in Egypt at the summit of the Forum on China-Africa Co-operation.

Air Zimbabwe now US$138 million in debt

Air Zimbabwe is losing US$3.5 million a month and currently has US$138 million of debt, according to the airline’s head, versus US$6 million of debt in 2006.

“Our cost of operating the business sits at about US$6 to US$7.5 million,” Air Zimbabwe Chief Executive Officer Innocent Mavhunga said on Tuesday, Radio VOP reports. “Our income is between US$2.5 and US$3.5 million. So simple mathematics would tell us there is a deficit averaging US$3.5 to US$5 million every month." He said that the state owned airline has US$137.7 million of debt, US$112.7 of which is owed to local creditors.

Mavhunga made the comments at Parliament’s Portfolio Committee on State Enterprises and Parastatals, which asked airline management to discuss the current state of affairs and explain how the airline will overcome its problems.

“On internal debt, statutory obligations to companies like the Zimbabwe Revenue Authority and the National Social Security Authority account for US$38 million, loans from the ministry of transport are up to US$26 million, deferred staff salaries and allowances are US$20 million plus US$12.3 million from our overdraft facility with our banks,” Mavhunga added.

“Our external debt comprises US$4.6 million to the International Air Transport Association and another US$4 million to Global Systems. We also owe our aircraft spares and parts suppliers some money and I think we have about US$5 to US$8 million for navigation services.”

Mavhunga said Air Zimbabwe’s dismal financial situation was due to sanctions and, during the era of the Zimbabwe dollar, the government’s refusal to charge in foreign currency. Other reasons for the airline’s poor performance were repeated pilot strikes, high operational costs from ageing aircraft, reduced passenger confidence in the airline and government interference.

“AirZim has been operating under a deficit since the 1990s and this worsened at the inception of the multiple currency regime,” Mavhunga siaid. “We have become less competitive, hence we have to price our fares slightly below our competitors.”

Several Air Zimbabwe aircraft were earlier this year grounded due to safety concerns and a leased aircraft was taken back after Air Zimbabwe could not pay for it. Of the airline’s fleet of eight aircraft, three are grounded. Such incidents have resulted in a big drop in passenger numbers and some Air Zimbabwe flights this year have flown almost completely empty.

Declining passenger numbers have forced the airline to reduce the number of destinations it services. It currently flies to Harare, Johannesburg, Lusaka, Bulawayo, Victoria Falls and Lubumbashi locally and Malaysia, China and the UK internationally.

Foreign carriers have been taking over the domestic market. “Our market share versus South African Airways is quite low. We control 30% of the Johannesburg route and market, whilst SAA accounts for about 50% of the market and British Airways slightly below 20%,” Mavhunga said.

Mavhunga said that Air Zimbabwe needs to be privatised and needs to retrench 400 employees from its bloated workforce of more than a thousand employees in order to cut costs. The airline consistently struggles to pay its workforce – something that has led to repeated pilot strikes. The airline last paid its workers in June.

“We immediately require US$40 million as working capital because we are operating on a cash-upfront basis with all our service providers and we need to service our creditors. We immediately need to restructure the airline, look at change management, recapitalise and inject a new fleet,” Mavhunga said, adding that it will take up to a year to overcome damage from the recent strikes.

The airline’s general manager Moses Mapanda told the parliamentary committee that attempts to assist Air Zimbabwe by encouraging government officials and MPs to travel on the state airline were not working. “If government officials do not support their own business, how does the shareholder expect Air Zimbabwe to survive?” he asked.

Air Zim mishap leaves Mugabe stranded

PRESIDENT Robert Mugabe and his delegation found themselves with a few extra days in the Big Apple after a chartered Air Zimbabwe plane sent to pick them up burst its tyres when landing in New York.

The Zimbabwean leader — along with scores of his allies — are banned from travelling to Western capitals after they were slapped with sanctions by the US and European Union over allegations of rights abuses and electoral fraud.

He left the country on September 17 to attend the 66th session of the UN General Assembly but was forced to put off his return home after the Air Zimbabwe plane burst four rear tyres when landing at an airport in New York.

Air Zimbabwe board Chairman, Jonathan Kadzura, confirmed mishap in an interview with The Standard but refused to give further details.

“It’s nothing serious, it’s not as magnified as you want it to sound,� Kadzura told the newspaper. “The plane’s tyres got punctured on landing and we are working on replacing them.

The national airline resumed local and international flights last week after a strike by pilots that grounded its planes for almost two months.

Government gave the cash strapped airline US$2.8 million as it sought to end the job boycott that has crippled the country’s tourism industry.

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.