Air Zimbabwe in crisis marriage

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Air Zimbabwe, the country’s national passenger carrier, is in talks with Air Tanzania for a crisis partnership that only seeks to reduce the flame of the financial fires currently engulfing them, without equity commitments to recapitalise either airline.
Air Tanzania is understood to have agreed to negotiate a deal with Zimbabwe’s national carrier after China’s Sonangol International Ltd climbed down on its offer to bail out the ailing airline.
Although the framework agreement is expected “very soon”, it falls short of what Air Zimbabwe wants — money to expand and service its ageing fleet, settle delinquent debts and pay employees, including staggering salary arrears.
Air Zimbabwe is on record saying it needs a technical partner that would farm as much as $750 million into the company and grab up to 60% of its stake to get back to its feet.
Peter Chikumba, Air Zimbabwe chief executive officer, said the airline is still waiting for the government to decide on a suitable partner for the company, which is also failing to settle its obligations with the International Air Transport Association (IATA).
If the recapitalisation deal drags, it won’t be long before a growing number of external and local creditors pounces on its assets.
External debts include claims from France, South Africa and the United States.
Nobert Machingauta, Air Zimbabwe’s manager for strategy and economic, yesterday said Air Zimbabwe and Air Tanzania have only agreed to cooperate on marketing, selling and operations, but are still in discussion over the type of partnership model they wish to establish.
“The two airlines will consolidate their positions in Southern Africa through joint route development and sharing of resources,” Machingauta said.
“Since the air transport industry has been opened to competition due to increased liberaliation, airlines have preferred to get into partnerships.
“The overriding objective is to share expertise and resources, increase market share and create barriers of entry to competition. It will help both carriers to develop connecting hubs.”
Under the envisaged deal, Air Zimbabwe and Tanzania would “work together on certain routes” and pool resources “to absorb unit costs and increase the airlines’ revenue base”.
Air Zimbabwe currently flies seven planes on just five routes, 50 percent less than slightly over a decade ago.
The airline pulled out of the Harare-Dar es Salaam-Nairobi route in the first quarter of last year when the country “dollarised” on viability concerns.