Cabinet to discuss Air Zim

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Cabinet is expected to discuss a turnaround strategy for struggling Air Zimbabwe that should put an end to the challenges affecting the airline.

Sources told NewsDay Air Zimbabwe management was recently asked to come up with a turnaround strategy for consideration by Cabinet and this had since been handed over to the committee on transport.

State Enterprises and Parastatals minister Gorden Moyo yesterday confirmed that Cabinet would discuss the Air Zimbabwe turnaround strategy either this week or next week.

“Cabinet will discuss the proposals put forward by the committee either tomorrow (today) or next week. As a committee we will give our own recommendations,” said Moyo.

Asked whether privatisation was one of the options being considered Moyo said: “It will not be correct for me go into the details, but certainly restructuring will be considered as it is part of the government policy on parastatals.”

The airline was one of first 10 parastatals and State enterprises identified for possible restructuring, commercialisation and privatisation last year.

Zimbabwe has 78 parastatals and State enterprises, most of which are underperforming despite their strategic importance to the economy.

Air Zimbabwe board chairperson Jonathan Kadzura recently told the local media treasury had indicated its unwillingness to finance the airlines’ operations.

He further said the airlines management, together with engineers, had drafted a turnaround plan indicating the need to reduce the workforce and address the debt issue by the shareholder, after which a partner would have to be looked for.

Air Zimbabwe has been facing severe financial challenges and only resumed operations at the end of last month after pilots grounded planes on July 29 demanding payment of outstanding salaries and allowances.

The airline is saddled with over $100 million in debt.
In June, Moyo told the Parliamentary Portfolio Committee on State Enterprises and Parastatals Management that the airline was in such shambles and its financial position so hopeless it would be difficult to find takers even if the government decided to offload it.

“There are certain entities where we think surely, the government should be out of,” Moyo said then.

“But it may not be easy to sell Air Zimbabwe right now even if you want to offload it because you may not find a taker because of its state. It is not just Air Zimbabwe which is suffering, very few airlines are doing business and it might be a big problem to sell Air Zimbabwe. A lot of parastatals are faced with huge debts and this on its own makes our parastatals unattractive to suitors. To get investors investing in a shell is not easy because of this debt overhang,” Moyo said.

Air Zimbabwe has pulled out of 18 routes from 25 and scaled down on the number of flights per week in a move meant to “rationalise operations and contain costs”.

While the airline was withdrawing from these routes citing “viability” challenges, its competitors notably South African Airways, Kenya Airways, Ethiopian Airways, Air Malawi and Air Botswana have been gaining ground.