Confusion rocks AirZim debt plan

Source: Confusion rocks AirZim debt plan – The Zimbabwe Independent August 31, 2018

GRANT Thornton is in the dark over its alleged “appointment” as the caretaker administrator of troubled national airline Air Zimbabwe (AirZim) after the sacking of the board early this month, escalating the confusion on operations at the flag carrier, the Zimbabwe Independent can report.

By Nyasha Chingono

The purported appointment of Grant Thornton came after Transport minister Joram Gumbo this month fired the Chipo Dyanda-led board under unclear circumstances following months of intense infighting.

The board was constantly demanding accountability over US$41 million requested by AirZim last year which was controversially diverted to Zimbabwe Airways (ZimAirways).
The board believes Gumbo gave it the boot to avoid scrutiny over the diverted funds and to cover up for the controversial purcase of planes for ZimAirways using funds meant to recapitalise AirZim.

A letter written to Gumbo by the board, dated April 18 2018 and seen by the Independent, confirmed relations had deteriorated.

The board accused Gumbo of blocking a US$300 million capital injection into the airline by a Dubai investor which could have turned around its fortunes over the past two years.
It also accused him of frustrating the parastatal’s turnaround strategy in a bid to prop up ZimAirways, which he and the airline’s former chief operations officer Simba Chikore had an interest in after helping to set it up.

“The allegations that the airline had no credible plans are therefore seriously flawed. It is further worrying that, after all the hard work and intellectual investment, the planes will get leased to another entity based on misrepresentation. Such a course of action baffled the board and will be most unfortunate for the national airline and the country,” reads the letter.

“Furthermore, the decision to lease the planes to another entity than recapitalise AirZim is evidence of unfortunate clear misunderstanding and misrepresentation of the current status of the airline. It is against that background that necessitates communication. The board humbly submits that it troubles it that the nation was advised of the same when we have kept you abreast of all the positive developments at the airline and achievement of the targets as set by you on our appointment, in 2016. The board believes in the spirit of fairness, transparency and pursuit of common objectives between the board of directors, management and the shareholders. Considering the diligence we have done since our appointment in 2016, these misrepresentations are a grave concern to the board.”

Ministry officials believe the letter infuriated Gumbo and caused him to dismiss the board before announcing the appointment of Grant Thornton as administrators.

Grant Thornton managing partner Reggie Saruchera however said his firm had not been appointed as administrator, saying he had only seen the purported appointment in the press.

“We are only seeing it in the papers. We have not yet received any communication to that effect,” Saruchera said.

Gumbo early this month said the disbandment of the board and subsequent appointment of a caretaker administrator were meant to safeguard the airline’s assets which have been under threat from litigious creditors.

Debt reconstruction is meant to facilitate the management of the airline’s debt and its subsequent amortisation. It is also meant to preserve the company’s assets and establish firm operations.

Aviation sources allege the proposed appointment of Grant Thornton was Gumbo’s cover up for sacking the board as government mulls a merger between ZimAirways and AirZim. Gumbo recently indicated that a single board would be appointed for the twin airlines hence the swift move to fire the board. The minister has often indicated that the twin companies would operate under the same name where ZimAirways will service the international route while AirZim plies the local and regional flights.

But the debt reconstruction plan could be up in flames as sources say the case file is not appearing in the High Court records.

This was unearthed when a number of pilots sought to respond to the sacking of the board at the High Court and subsequent appointment of the provisional judicial managers. This could mean AirZim is still unsafe from its litigious creditors seeking to attach property.

AirZim is saddled with a US$341 million foreign and domestic debt which has been accumulated over a decade of mismanagement. The inability to repay the debt has left the airline in a quandary as it is now stripped of its international aviation privileges.

The appointment of Grant Thornton as administrator was not in government’s initial plans.

According to the Government Gazette of July 27, government had appointed three AirZim officials as interim administrators. The Ministry of Transport then sought the services of Grant Thornton through the approval of the Procurement Authority of Zimbabwe.

AirZim management is also in the dark concerning the role of Grant Thornton in the new regime.

“We are clueless and in the dark,” the airline’s corporate services manager, Tafadzwa Mazonde, said.

He said management was battling to keep the airline’s aircraft in the sky after the sacking of the board and would still go ahead with its plans to attain recertification under the International Air Transport Association operational safety audit and European Aviation Safety Agency (EASA).

“As management, we are doing our best to keep the aircraft in the sky. We are still running with the projects we started with the board. We concluded the second stage of our IOSA audit on Friday last week. By December, we should be certified and ready for EASA certification by May 2019,”said Mazonde.

Contacted for comment this week, Gumbo said he had written to relevant ministries to gazette the new administrators.

“You are far ahead of what is happening. Before something happens due process must be followed. There is nothing to hide here. For your own information, this week I have been writing to relevant ministries so that we can gazette the new administrators,” Gumbo said.

Early this month, the ministry of Finance notified Gumbo that it was no longer feasible to extend protection to AirZim under the Finance Act and recommended to the Office of the President and Cabinet that Air Zimbabwe (Pvt) Ltd and Air Zimbabwe Holdings (Pvt) Ltd should be placed under the Reconstruction of State Indebted Insolvent Companies Act Chapter (24:27).

The recommendation was later approved by the Ministry of Justice, Legal and Parliamentary Affairs minister Ziyambi Ziyambi and was gazetted.