AIR Zimbabwe (AirZim), rocked by an insurance scam which prejudiced the national flag carrier of more than US$10 million looted over a five year-period by its senior managers and Navistar Insurance Brokers, owes various companies, including financial institutions, fuel suppliers, workers, Zimbabwe Revenue Authority and trade creditors, more than US$230 million.
Investigations by Zimbabwe Independent this week revealed AirZim owes its principal banker, CBZ more than US$4 million. As of October 31 last year, AirZim owed a total of US$192 million to its creditors but the debt has since ballooned to US$232 million.
Because of its poor credit worthiness, AirZim has been turned down from borrowing by some local banks. Just last month, the national airline approached CBZ seeking a loan of US$150 000 to pay salaries for its workers, but its approaches were rejected.
According to senior AirZim officials, the national airline failed to secure a loan of US$5 million from several financial institutions in March last year due to lack of collateral and poor credit worthiness. The US$5 million was supposed to have been used as working capital for the airline and to pay workers who had not received their salaries for more than 12 months.
Sources said the national airline was only able to source a loan of US$700 000 from Metbank, which it used to pay salaries for around 1 000 workers on its payroll.
The loan was approved by the board after its chairman, Ozias Bvute, who is also Metbank CEO, declared a conflict of interest and recused himself during negotiations.
AirZim spokesperson Shingai Taruvinga said the airline has since been granted a protection order by government, shielding its assets from seizure by creditors.
“We are currently in the process of ring-fencing the debt so that it is taken over by the government. The protection order was done through an Act of Parliament. This gives us time to restructure the national airline,” she said.
“This is similar to the bankruptcy protection laws which many airlines have used like Delta and Continental. The world over it is known that most airlines don’t make profits. Just in our neighbouring country, SAA (South Africa Airways) is asking for another bailout after getting US$6 billion from government last year.”
A senior AirZim official said the current economic environment did not allow the national airline to break even because of crippling overheads. The only profitable airline in the region is Ethiopian Airlines because of its lean overhead structure, he said.
The insurance scam is just a tip of the iceberg as there are a lot more revelations of corruption to come involving the procurement of spare parts, fuel, equipment, ticket sales and an aeroplane engine for a Boeing 767 worth US$5 million that went missing.
Forensic reports with all the details will be released soon.