HomeBusiness DigestHuge cash outlay for Air Zimbabwe restructuring

Huge cash outlay for Air Zimbabwe restructuring

Eric Chiriga

AIR Zimbabwe’s unbundling programme could hit a major snag, with sources indicating this week that the new Strategic Business Units (SBU) will require a huge cash outlay which the airline has not yet secured.

Each of the four subsidiarie

s that will become the SBUs under the new group’s unbundling programme will require fresh capital, sources revealed.

The unbundling process, announced by Air Zimbabwe board chairman Mike Bimha last month, will see the creation of a holding company called Air Zimbabwe Holdings, with the flagship passenger company becoming a subsidiary operating as Air Zimbabwe.

Other subsidiaries will be Air Zimbabwe Cargo, Air Zimbabwe Technical Services and National Handling Services (NHS), which had already been operating as a subsidiary of Air Zimbabwe.

Air Zimbabwe Cargo would be responsible for the group’s cargo business and Air Zimbabwe Technical Services for the maintenance, repairs and overhaul of facilities.

NHS will be responsible for passenger and cargo handling at all operational airports. Air Zimbabwe is currently run by acting CEO, Oscar Madombwe, following the suspension of Tendai Mahachi last year.

It could not be immediately established how much the four companies will require in the form of new capital, but indications are that over $1 trillion might have to be injected to give life to the new operations.

Air Zimbabwe has suffered persistent operational problems as a result of high operational costs and a grounded fleet.

Bimha confirmed that Air Zimbabwe had not yet decided on how to capitalise the unbundled operations, saying the board had not yet met to discuss the issue.

“We have not even met as board,” he said, responding to a question from businessdigest.

Bimha said they were now looking into the capitalisation and operational issues of the restructured company since they had received cabinet approval, which he said was important.

Air Zimbabwe Holdings will become answerable to the board of directors and will oversee the overall performance of the SBUs.

Bimha recently announced that as part of the restructuring measures, the company would retrench 360 workers.

He said staffing levels had generally remained the same over the years despite a drop in passenger traffic and a decline in the airline’s fleet size. Air Zimbabwe had also lost its market share over the years. The first phase of the retrenchment would be voluntary while the second phase would be compulsory.

Bimha admitted that major challenges facing the passenger company included regaining the confidence of the market, getting a strategic partner, re-establishing reliability, rebranding and modernising the fleet.

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