Govt plots shutting down AirZim 

Source: Govt plots shutting down AirZim – The Zimbabwe Independent November 10, 2017

GOVERNMENT has begun secretly winding down struggling flag carrier Air Zimbabwe (AirZim)’s operations through the back door as a new company with an opaque shareholding structure takes to the sky.

By Bernard Mpofu

Sources familiar with the secret plan said this week AirZim has in recent months been retrenching its staff while its flights have also been reduced.

This comes at a time a project to establish a new airline, Zimbabwe Airways (Zim Airways), whose relationship with flag carrier AirZim is unclear, is moving towards finality amid revelations Transport minister Joram Gumbo and AirZim chief operating officer Simba Chikore might be caught in a massive conflict of interest storm.

Gumbo and Chikore have been assisting the privately-owned airline set up at the expense of AirZim, which falls under their purview and supervision raising a serious and damaging conflict of interest on their part.

Although the deal is shrouded in secrecy and thus shadowy, a Twitter user, Jerry Haas, who regularly comments on aviation issues and could be a pilot, judging by his posts on social media, has been regularly posting on Zim Airways developments, further deepening the mystery. In July Haas tweeted that Zim Airways will eventually take over AirZim: “Zimbabwe Airways work plan: secure the planes, identify the routes, cut current workforce in half, close Air Zimbabwe and launch Zimbabwe Airways.”

The new airline is expected to fly into major international destinations which AirZim suspended over a decade ago.

“Air Zimbabwe is moving towards reducing its staff complement by more than half. Key staff at the airline is likely going to join Zimbabwe Airways, which is currently on a massive recruitment drive. All this shows that this could be a deliberate effort to sink Air Zimbabwe to make way for Zimbabwe Airways,” said an aviation source.

Chikore, President Robert Mugabe’s son-in-law, is expected to be the new chairman of Zimbabwe Airways, the source added.

“Zimbabwe Airways will have its offices at Robert Gabriel International Airport (formerly Harare International Airport. Work has already started to refurbish some office space at the airport for the new airline.’

Information gathered by the Zimbabwe Independent shows that Zimbabwe Airways is owned by a local firm, Zimbabwe Aviation Leasing Company (ZALC). The company was formed by an unidentified group of Zimbabwean investors, among them lawyers and businesspersons with interests in the aviation industry. Some of the ZALC shareholders are said to be based in the diaspora.

An enquiry with the Deeds Office in Harare indicated ZALC was registered under file number 3015/12. The file was however missing from the office, meaning the directors could not be immediately ascertained.

Zim Airways, other sources further said, was a sanctions-busting project by government after it emerged that AirZim had failed to secure new investors.

Contacted for comment, AirZim board chairperson Chipo Dyanda said the airline had last embarked on retrenchments in June, adding that it had no relationship with Zim Airways.

“It is untrue (that retrenchments are still ongoing). The retrenchments that we carried out were in June and it has been in the books since last year when we were carrying out the restructuring exercise which completed. The intention was to match the productivity levels and the payroll,” she said.

Chikore could not be reached for comment as his mobile number was unreachable.

Early this year, AirZim rolled out an ambitious plan to overhaul the company that will see Treasury expunging the airline’s legacy debts, estimated at US$330 million, by way of liquidation before acquiring new planes from Asia.

After failing to court new investors due to the company’s weak balance sheet, government is now seeking partnerships with international airlines instead of engaging a strategic partner to turn around AirZim. At Independence in 1980, the airline had 18 planes in its fleet, but today it is operating at less than a third of its all-time peak.

Late last year, government engaged five international carriers from Kenya, Ethiopia, Singapore, Turkey and Malaysia to partner troubled AirZim with hopes of turning around the fortunes of the ailing and debt-ridden flag carrier.

In 2013, cabinet approved a proposal by the AirZim board to raise US$15 million through 180-day commercial paper.

The airline also proposed the issuance of ordinary shares to raise US$30 million through private placement to local investors and the issuance of ordinary shares and preference shares to international investors and partners. To clean its balance sheet and settle legacy issues, the then AirZim board, led by banker Ozias Bvute, also proposed the restructuring of the current debt through the issuance of money-market instruments to current creditors.

The company also planned to issue 10-year corporate bonds to current creditors and other third-party investors of up to US$200 million to reduce the debt overhang affecting the entity. Following the approval of the plan, officials embarked on road shows, canvassing for investors.

During that same year, the Transport ministry commissioned audit firm Ernst & Young to develop a business plan for AirZim which was approved by cabinet.

AirZim stopped flying its planes into any of the European countries in 2011 after one of its planes was impounded in London for failing to repay debts.