Air Zimbabwe will collapse again unless government stops meddling


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Air Zimbabwe, which resumed flights last week after a 10-month break, will collapse again unless the government stops meddling and allows the national carrier to operate as a business entity.

The airline stopped operations in January after several debtors threatened to attach its aircraft. It had a debt of about $140 million of which $35 million was workers’ wages.

The airline had to be grounded though the government had poured in more than $30 million between January 2010 and January 2012. The money was, however, not paid to the airline but directly to service providers by the Ministry of Transport which alone paid out about $29.9 million.

Other payments were made by the Zimbabwe National Roads Administration and the Zimbabwe Mining Development Corporation.

The payments raised questions as to what criteria the ministry used to decide who to pay as the system was open to abuse because the ministry was not necessarily paying creditors that Air Zimbabwe would probably have wanted to pay first to remain in business.

A source who provided The Insider with the payment schedule said the ministry might have paid creditors favoured by Transport Minister Nicholas Goche.

The source also said Finance Minister Tendai Biti must have known who was being paid as there was no way government money could be paid out without his knowledge.

The Ministry of Transport tried to sell Air Zimbabwe’s shareholding in National Handling Services, the only profitable arm of the airline, shortly after Air Zimbabwe stopped operations but the sale was stopped by unions which claimed that the ministry was trying to strip the national airline of its assets.

There was also speculation at the time that Goche and Biti were working together and knew about the deal.

Former Air Zimbabwe chief executive officer Peter Chikumba under whose watch the payments were made declined to talk about them citing a confidentiality clause he signed before leaving the airline.

He, however, told United States ambassador to Zimbabwe James McGee that there was no way the airline could survive because of government meddling in the airline.

He said the airline had been plunged into debt by government’s insistence that it should charge fares in Zimbabwe dollars instead of hard currency.

Chikumba said passengers were paying a paltry $24 to fly to London. He said he repeatedly pleaded with the Ministers of Transport and Finance to change policy but without success.

“We were raising prices twice a week, yet the real operating expenses were rising twice a day,” he told McGee.

Chikumba said things were made worse by the 7-day turnaround period through the Reserve Bank of Zimbabwe for the conversion of revenue to foreign currency payments.

“We would transfer what we thought was the equivalent of US$10 000 to the RBZ for payment, only to be credited one week later with a US$1 000 credit.”

Chikumba said the only way to get the airline back on line was through true privatisation. This would not only enable the airline to raise capital but also to have a corporate board focussed on profitability.

He said this would also shelter the airline from inappropriate interference from the government.

(5 VIEWS)

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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