Air Zimbabwe Faces Going-Concern Warning Amid $39 Million A320 Dispute

Air Zimbabwe is under scrutiny as the acting auditor-general issues a going-concern alert due to the airline’s substantial losses of USD407.8 million and a contingent liability of USD39 million linked to an ongoing legal battle over the ownership of two A320-200s. The financial report for the year ending December 31, 2022 (2019 for Air Zimbabwe), highlights total liabilities surpassing assets by USD380.2 million, raising uncertainties about the airline’s ability to continue as a going concern.

The warning is linked to a USD39 million claim by Isle of Man-based special purpose vehicle SouthJet One over ownership of Z-WPN (msn 1973), currently stored at Johannesburg O.R. Tambo. Its counterpart, Z-WPM (msn 630), owned by China Sonangol International through SouthJet Two Ltd, has been stranded in Johannesburg since January 2014. Discrepancies between the Zimbabwean government’s claim of a 2013 donation and SouthJet’s insistence on the 2012 lease agreement persist.

While reports suggest Air Zimbabwe aims to resume London Gatwick flights in January 2024 using B767-300s, the financial outlook remains challenging. The auditor-general notes the airline’s inability to account for a USD92.4 million discrepancy in balance sheets, raising concerns about accuracy. Additionally, the lack of tax calculations and filing of quarterly income tax returns further complicates the financial landscape.

Air Zimbabwe’s management faces criticism for not conducting impairment testing on recognized aircraft, leaving doubts about their recoverable values. The airline’s financial statements include USD1.8 million in expenses without supporting documents. The financial uncertainties, coupled with ongoing legal disputes, cast a shadow over Air Zimbabwe’s future as it grapples with complex financial challenges.

For comments on these developments, ch-aviation has reached out to Air Zimbabwe, SouthJet’s Zimbabwean legal counsel, and other relevant parties.