HARARE (Reuters) – State-owned Air Zimbabwe needs $260 million in new capital because it is insolvent and wants the government to take over $298 million in debts to help turn around the loss-making carrier, its officials said on Monday.
Like most state-owned firms, Air Zimbabwe has been making losses for years due to mismanagement, high operating costs, old equipment and aircraft that are no longer profitable to fly.
Out of 10 aircraft, only three are flying, two are undergoing maintenance and the rest are out of service.
“What’s currently happening right now is that Air Zimbabwe is like a patient who is in dire need of fluids otherwise they die of dehydration,” Pagiel Chimudzi, the airline’s general manager for finance, told a committee of parliament.
“The airline is actually insolvent. I came in two weeks ago and I will tell you what I saw on the ground, it’s people who are running fire-fighting,” said Chimudzi, who took up his role this month.
Chimudzi said the new capital would have to come from the government or the airline would seek a new shareholder.
He said the airline’s debt comprised of salary arrears, outstanding taxes, payments to the national pension fund and employee health insurance and foreign debts of $26 million.
Air Zimbabwe’s acting Chief Executive Edmund Makona said with new capital, the carrier would develop new regional and international routes, upgrade its equipment and cut costs.
He said Air Zimbabwe, which has over the past years lost experienced pilots and engineers mostly to Middle Eastern airlines, was in talks with Bombardier Inc to purchase two short haul aircraft for domestic routes.
Makona said the airline would this month invite officials from the European Aviation Safety Agency to certify its aircraft, adding that this would attract European Union-registered planes to be maintained in Harare at cheaper prices.