History repeating itself at AirZim!
HISTORY is repeating itself at the country’s embattled national airline – Air Zimbabwe – and the question is at what cost to the taxpayer and the national fiscus.
On Tuesday, Cabinet considered and approved Air Zimbabwe’s balance sheet and its business plan post reconstruction and, among other things, ministers agreed that the government should assume the airline’s debt, estimated at over US$300 million.
The Cabinet also agreed to extend the reconstruction of Air Zimbabwe to June 30 next year to allow “payment of creditors as well as return the airline to profitability”.
This is not the first time the government, in reality taxpayers, have assumed Air Zimbabwe’s debt and it is now becoming a worrying trend.
In March 2012, Air Zimbabwe Holdings was unbundled into two entities — Air Zimbabwe Pvt (Ltd) and the National Handling Services — amid measured optimism that it would turn the corner, run professionally and profitably. Its debt, then about US$150 million, was assumed by the government, but no change took place.
Instead, the airline became the world’s laughing stock and now is in a desperate need of extrication from the precipice. There is little confidence in the aviation industry that the reconstruction will see Air Zimbabwe flying again profitably, unless and until the government and management at the airline change their business ethic.
Currently, the company has a one-man board in chairperson, former Justice minister Patrick Chinamasa, and an administrator. Chinamasa and the reconstruction team, if they are to succeed at Air Zimbabwe, have to ensure that the airline is run on strictly commercial lines without interference from politicians.
It must be run by a competent board that understands international financing, which is the hallmark of successful airlines the world over. For the turnaround strategy to succeed, Air Zimbabwe also desperately needs a strategic partner to inject fresh capital.
This should not be a problem now given that the government has agreed to assume its debt as part of the country’s sovereign liabilities to be paid up by the long-suffering taxpayer. If the government fails to lure a strategic partner, it should come up with ways to finance the new Air Zimbabwe.
Air Zimbabwe could also benefit from a public/ private partnership, of which the success story of Kenya Airways can attest. It is high time the airline flies again profitably without constantly returning to the burdened taxpayer for bailouts!