Air Zimbabwe says administrators rescued insolvent airline
AIR Zimbabwe directors Grant Thornton, whose term ended last week when the government appointed a six-member board of directors, rescued the airline from litigious creditors and put the national carrier in trouble on the road to recovery, an official said.
AirZim spokesman Fistme Vitori said the directors, led by Reggie Saruchera and Tonderai Mukubvu, were largely successful in meeting the goal of turning around the indebted state-owned company.
“Before the reconstruction, the national airline was in danger of seizing property and executing orders for which the administrator was able to obtain a reconstruction order with the effect of staying all legal action, seizure and execution,” Vitori said. at NewsHawks.
The board includes the permanent non-accountable secretary of the Ministry of Finance Andrew Bvumbe, Michael Musanzikwa, researcher and lecturer at Chinhoyi University of Technology and the director general of the Zimbabwe Tourism Authority, Givemore Chidzidzi.
The Director General of Tax Policy at the Ministry of Finance Pfungwa Kunaka, two other people identified only as N. Chifema, and K. Magaya, complete the six-member council.
Former Transport Minister Joel Biggie Matiza appointed the Saruchera-led administration to turn around the airline in 2018, with reopening international routes and seeking partnerships high on the priority list.
Although Saruchera and his company have failed to reopen international routes, mainly due to a lack of long-haul aircraft and international aviation licenses, the administrator has taken delivery of the planes from Zimbabwe Airways. AirZim now has one Embraer ERJ145 regional aircraft from the United States and two Boeing 777-200 ER long-haul aircraft from Malaysia, bringing the total number of aircraft in service to five. These fleets also include a Boeing 767 and a Boeing 737.
While the massive debt distress has scared investors away from hiring the airline, there is a silver lining after the government approved the airline’s debt take-over bill last month.
“We have 10 interested parties who submitted their partnership offers with Air Zimbabwe. One of them had a unique proposal that she made to Air Zimbabwe,” Mukubvu said.
“It has been slow in the sense that there are still key elements to be addressed and these elements have been very clear to the government. One of these areas is debt recovery. So we are dealing with the Department of Finance. to try to find a viable solution around debt recovery. The Debt Takeover Bill will provide funding to cover all liabilities, ”Vitori said.
“The shareholder has made funds available for the settlement of all verified claims of local liabilities to the tune of ZW $ 349.14 million, while commitments continue with foreign creditors with total balances equivalent to 31, $ 52 million on a reconstruction plan, ”she said.
“The airline has also managed to collect US $ 5.4 million in trade receivables out of a possible total of US $ 7.05 million, with the airline now operating on a strictly cash basis,” Vitori added.
The bill will provide a framework for the debt assumption processes and procedures, the validation and reconciliation of liabilities, the debt assumption terms, the terms and conditions of the debt settlement plan and the debt collection plan. debt paid by the government on behalf of the airline.
The government’s delay in moving forward with the debt recovery plan had eroded the airline’s chances of courting new partners after the company was placed on debt reconstruction in 2018, officials say .
The debt scared off potential investors who expressed interest in pouring millions of dollars into the airline.
Vitori added that the administrator also updated the company’s financial statements which had been overdue for about a decade. The financial statements cover 2012 to 2018, while 2019 is being finalized.
“Together with Air Zimbabwe’s current management team, they developed a six-year business plan and strategic turnaround plan, both of which were approved by the government at the 45th cabinet meeting.” , said Vitori.
When asked if the airline is now out of the woods, Vitori said: “Yes, we think so and we are very confident that with the arrival of the new interim board of directors, the national airline will continue. on a positive trajectory of growth, sustainability and ultimately profitability. “
AirZim has been rocked by multiple crises over the past decade, including mismanagement, corruption and willful sabotage by the authorities.
The late former president Robert Mugabe, his son-in-law Simba Chikore and then transport minister Joram Gumbo had devised a plan to funnel recapitalization funds from AirZim to ZimAirways, a dubious airline.
In 2018, Zimbabwe’s Anti-Corruption Commission (Zacc) investigated Chikore into the $ 70 million plane scandal, a ploy that was allegedly used to siphon millions of dollars out of the country under the pretext of building a new airline. .
At the time, Zacc opened an investigation into the ZimAirways deal to establish how the murky airline controversially bought the two long-haul Boeing 777s for $ 18.5 million and $ 16.5 million, for a total of $ 35 million.
He also planned to buy the two Embraer planes for US $ 6 million using treasury bills. This brought the total for the revised deal to $ 41 million.
Before revising the deal, the government originally planned to spend $ 16.5 million each, while the other two would be purchased for $ 18.5 million each, bringing the total to $ 70 million.
Initially, ZimAirways was billed as a private company, although Chikore, who was AirZim’s COO, was instrumental in its creation. Despite several probes, the ZimAirways saga has not been completed.
In addition to being caught up in the ZimAirways saga, AirZim has been hampered by mismanagement.
The company inherited 18 planes from Independence, but until recently only had two planes.