By Taurai Chinyamakobvu

DOES Zimbabwe really need a national airline? Or does Zimbabwe need an airline service?
Without splitting hairs, the two questions address different issues. Indeed Zimbabweans need an airline service. But they do not need AirZim.
It is highly probable that beleaguered AirZim is technically insolvent, and should simply be liquidated. Why the firm is still in existence in spite of so much corporate decay is not just mind-boggling, but also mind blowing. Despite its safety record we have to face the moment of truth that the case for Airzim’s continued existence is now very weak. I will explore why this is the best way forward.
First, clearly the airline is probably technically insolvent. One does not need to see the balance sheet of the parastatal to make this conclusion. Revelations in interviews by the chairman and acting chief executive officer reveal that the company is not only heavily indebted to its employees, banks, fuel suppliers and the International Air Transport Association (Iata), but also to a plethora of other creditors. Given its exposure to creditors, Air Zim should seek voluntary liquidation or file for bankruptcy protection.
This brings to my mind the case of Royal Bank and First Mutual Life in 2004, when FML sought to place the bank under liquidation. In the same vein, because AirZim’s liabilities are potentially much greater than the net realisable value of its assets, it should be wound down to protect creditors and to avoid a bailout by the government which in effect would be a taxpayer bailout.
In a recent interview, the AirZim chairman disclosed that the airline owed creditors US$101 million.He also disclosed that the airline had monthly revenues of US$4,5 million  against expenses of US$6,5 million. Extrapolating these figures over one year shows that the airline will make a loss of about US$24 million.
Second, AirZim represents the height of corporate incompetence and managerial ineptitude, and malfeasance even at corporate and shareholder level. AirZim has changed chief executive officers probably more than any other company I can think of in Zimbabwe, many of them lasting no more than two years. The board has also been shuffled and reshuffled many times yet the airline keeps bleeding.
Management has failed to create rapport with employees. Clearly, it does not appear as if there is mutual trust between the managers of the firm and the rest of the employees. It is also very obvious that all AirZim employees have no sense of duty to the company, the country and its vision, if ever there is a vision at the airline.While many other airlines have entered into alliances such as Sky team and Star Alliance among others, AirZim is not known as a member of any alliance.
The shareholder at AirZim has demonstrated even more overwhelming ineptitude. There is no way to separate the ineptitude of the management at AirZim from the ministers that oversee the parastatal. Granted, these ministers have changed over the years, yet the reign of each one of them means they presided over the successive decay of the airline over the years. It is also the same ministers who shuffled and reshuffled board after board without overseeing a radical turnaround programme and overseeing implementation of such a programme. The government also directed AirZim to embark on certain unviable routes with neither the strategic stamina nor adequate resources to compete with larger airlines.
Third, a national airline is a flag carrier. Under normal circumstances, AirZim should be an ambassador of the national brand. Yet many Zimbabweans are not very proud of flying AirZim for many reasons, chief among which is lack of reliability. The state of Air Zim’s aircraft, operations and financial position renders its “national branding” role very untenable. The recent, rare but punitive action by Iata when it barred the airline from participating in the international financial and booking pool for owing close to US$300 000 was a blow to the national brand. Iata told all travel agents to “immediately stop all ticketing and refund transactions”. Internationally, there is no worse publicity for any airline than this.
It could be argued that AirZim is good for resuscitating tourism. That view remains valid until you check the tourism arrival figures and revenues, which are actually increasing at the same rate as the airline is getting embattled. It’s a remarkable inverse relationship!
For decades, the government has been inexplicably holding on to AirZim, despite its recurring losses. At the time of writing it had been reported that a cabinet minister had disclosed that AirZim was too rotten to sell. He described it as being in such a state that no investor would want to buy it. If it is in such a state, then why does the government want to keep it? If the government keeps holding on to the airline, the taxpayer will eventually foot the capital deficits that emanate from poor management.
The logical route therefore is not to keep pumping money into this airline. Tribal wisdom of the Dakota Indians has it that when you discover that you are riding a dead horse, the best strategy is to dismount. You may change the riders; appoint a committee to study the horse; arrange to visit other countries to see how others ride dead horses; lower the standards so that dead horses can be included; reclassify the dead horse as “living impaired”; hire outside contractors to ride the dead horse; try to harness several dead horses together to increase the speed; provide additional funding and training to increase the dead horse’s performance; do a productivity study to see if lighter riders would improve the dead horse’s performance; or declare that as the dead horse does not have to be fed, it is less costly, carries lower overheads, and therefore contributes substantially more to the mission of the organisation than do other horses.
You may even argue for rewriting the expected performance requirements for all horses, but at the end of the day, you will have to dismount. That’s what needs to happen at AirZim. That airline should be liquidated as of yesterday. That way, the government and the taxpayers will cut their losses. Creditors will lay claim over the assets. Besides some employees who will lose jobs, Zimbabwe will remain a destination for airlines. Tourism will continue and the fiscus will have one less company to bail out.
Liquidating a national flag carrier is not new. Zambia liquidated its Zambia Airways in 1995. Here in Japan, the national flag carrier, Japan airlines, filed for bankruptcy protection in 2010. That strategy allowed the airline to restructure its debt and staff costs as well as pension obligations. It is now exploring alliance partnership with other international carriers.
To provide a contrast, one has to look at airlines that are doing very well in Africa. Ethiopian Airlines keeps growing and serves 61 international destinations, and will soon be joining the Star Alliance. It has provided training to many pilots from other countries too. It also plans to buy 10 Boeing 787 Dreamliner aircraft, the first African country to announce such plans. Kenya Airways provides another sterling example of a well run airline.But the way forward for AirZim is simple: liquidate.

• Taurai Chinyamakobvu is a consultant, scholar  and analyst based in Japan. He can be mailed at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Readers Comments (2)

Show/Hide comments

Show/Hide comment form