Harare set to absorb Air Zimbabwe debt

Zimbabwe’s Cabinet has decided to assume the debt of Air Zimbabwe (UM, Harare Int’l) and to extend its reconstruction period to June 30, 2021, to rescue the state-owned airline, the country’s Information Ministry has confirmed. According to local media, the national carrier has debts exceeding USD300 million that are weighing down the restructuring exercise and potential strategic equity bids. In a statement issued on December 15, Information, Publicity, and Broadcasting Services Minister Monica Mutsvangwa said the Cabinet had “considered and approved Air Zimbabwe’s balance sheet and its business plan post-reconstruction as presented by the Minister of Transport and Infrastructural Development”. No details were given on the proposed reconstruction plan. “Owing to the strategic nature of the national airline, Cabinet resolved to assume the debt as well as the extension of the Air Zimbabwe reconstruction period to June 30, 2021. The reconstruction will provide for the payment of creditors as well as return the airline to profitability”. Mutsvangwa said the airline would resume flights to Victoria Falls and Bulawayo on December 21, 2020, after resuming regional flights in October. It had suspended all flights in March due to COVID-19. A combination of huge debts, viability problems coupled with unviable routes, and a weak balance sheet lead to Air Zimbabwe Holdings and Air Zimbabwe being placed under a reconstruction order/administration in 2018 to prevent legal action and the attachment of assets. State broadcaster ZBC News earlier this month quoted the administrator, Tonderayi Mukubvu of Grant Thornton, as saying that “major strides” had been made to restore the airline to profitability. He said while the state-owned carrier was now operating under stable conditions, its debt needed to be resolved. The national airline’s revival is seen as a critical step in achieving targets under the country’s Vision 2030. The government committed itself to facilitate an open market and a stable economy. Up to ZWL2.5 billion Zimbabwean dollars (USD23.15 million/black market rate) has been set aside for infrastructure projects, including the expansion of the Harare Int’l Airport.