On a wing and a prayer: Overloaded by debt and a bad rep, grounded Air Zim floats tender for investor

A new Zimbabwe Airways Boeing 777-200 lands in Harare, Zimbabwe, April 11, 2018. REUTERS/Philimon Bulawayo

The Government has floated a tender for a new investor in Air Zimbabwe, which is $377 million in debt and recently placed under administration. 

A notice published on Monday invited potential investors to show their interest by buying registration forms for US$20,000 and signing a non-disclosure agreement. 

Transport Minister Joel Matiza last week told MPs that the Air Zim debt would be “warehoused”, an attempt to attract investors by pushing the debt to the taxpayer.

“I intend to go to tender this coming week to seek an investor for the airline. Engagements are underway to warehouse the debt at Air Zimbabwe. Cabinet has approved the debt warehousing proposal,” Matiza said. 

“Currently the debt is at $377 million. Of this debt, however, $35 million is foreign and $260 million for Government and state enterprises.” That debt may be turned into equity, Matiza said. 

Press notice on Monday seeking investors for Air Zimbabwe

Previous attempts to secure partners for Air Zimbabwe never went far, as airlines approached balked at Air Zimbabwe’s massive debt. The last company approached, Ethiopian Airlines, rejected Air Zimbabwe over its long list of creditors, former Transport Minister Joram Gumbo said in a recent interview. 

The airline’s fleet has been depleted; the company operated 18 aircraft in 1980, but now just two planes out of its fleet of six is in the air. On Monday, Air Zimbabwe separately floated a tender for the lease of a Boeing 767.

A murky deal in which the Government bought planes from Malaysia, under a purported new company, Zimbabwe Airlines, also clouds the state of Zimbabwe’s aviation assets even further. 

But according to Matiza, Zimbabwe Airlines planes – which include two B777 aircraft and an Ambraer – will be handed over to Air Zimbabwe. 

“Government is working towards merging the two by dissolving Zimbabwe Airways and transfer all assets to Air Zimbabwe,” he said. 

Matiza told MPs that he had recommended to Cabinet that Air Zimbabwe be allowed to charge for airfares in foreign currency for international flights. 

Air Zimbabwe is among over a dozen state enterprises that have been placed on a list for either total or partial privatisation. 

Government has appointed auditors Grant Thornton as Air Zimbabwe’s administrators, with the task to “raise money in any way without the authority of shareholders for the purposes of the reconstruction”. Grant Thornton were handed a tight six-month deadline to restructure the airline’s debt. 

Should Government finally succeeded in getting an investor, the new company will have to work overtime to not only restore assets and skills, but to repair a reputation for flight delays and cancellations that has seen their airline deserted by customers. 

Last week, Air Zimbabwe announced a week of flight disruptions, saying it only expected normal service to be restored from today (Monday). 

Also making Air Zimbabwe less attractive to investors is a ban on its planes from key routes to Europe and America over non-compliance with strict safety checks.