Thursday, August 20, 2009

Zimbabwe eyes private cash boost to save carrier

By: Reuters
19th August 2009

Zimbabwe's state-owned airline is considering opening up to private shareholders in exchange for a huge cash injection needed to avert its collapse and plans to cut up to 500 jobs, an official said on Wednesday.
A unity government formed by rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai to end a decade-long political crisis has said it plans to restructure poorly managed state firms, which have been a drain on the budget.
Air Zimbabwe, which government officials say currently receives $2-million a week from state coffers, is a perennial loss-maker weighed down by an ageing fleet, debt and a severe economic crisis in the southern African country.
The airline's chairman, Jonathan Kadzura, told Reuters that both Air Zimbabwe and the government were in talks to find ways of urgently streamlining and recapitalising the business.
"It's either you adapt or die. This is a changing, challenging environment and companies, including Air Zimbabwe, have to be dynamic," Kadzura said.
An investor's prospectus prepared by the government said Air Zimbabwe requires $750-million to renew its fleet and to install a hangar fire protection system. The government would give up a 60 percent stake in exchange for the cash injection.
"We cannot give any figures yet, but we're looking at funds to acquire new aircraft and to install modern ground handling equipment. We're talking to a number of corporations looking at going into partnership with us," Kadzura said.
The chairperson said the decision to lay off a third of Air Zimbabwe staff or up to 500 people was a key step towards realigning the company.
"The job cuts signal the beginning of the restructuring, which shows both the shareholder and Air Zimbabwe are serious," Kadzura said.
"Air Zim's current slim passenger and cargo load factor cannot justify its huge salary bill."
The national carrier's passenger numbers have declined by more than 30% since 2000, coinciding with a corresponding dip in tourist arrivals as the political situation deteriorated, mainly due to a violent drive by Mugabe supporters to seize land from white commercial farmers.
Edited by: Reuters

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