HomeBusiness DigestMassive retrenchment looms at debt-ridden Air Zim

Massive retrenchment looms at debt-ridden Air Zim

MASSIVE retrenchments are looming at the struggling state-owned flag carrier Air Zimbabwe after government assumed the airline’s debt in a desperate bid to court new investors, it has been established.

Taurai Mangudhla

Following a cabinet resolution to expunge AirZim’s debts, a move widely seen as signalling the implementation of a restructuring exercise, workers are now resisting the turnaround plan, saying it could cost the jobs of ordinary staffers as well as half of management.

“Employees, particularly management, at the state carrier, do not support the restructuring exercise given that their jobs are at stake as the company streamlines operations to cut costs,” said a source close to the developments.

“The new chief executive officer has been having problems with the board over his reluctance to act on the reforms in respect of headcount.”

Insiders said the restructuring, among other key cost-cutting initiatives, will trim management staff by 50% to 12 members and also significantly reduce headcount across all levels, a move that has become unpopular.

AirZim is a step closer to its ambitions of securing funding and/or a technical partner to help it fly out of debt and operational woes amid indications several potential suitors and funders are courting the airline.

Saddled with a debt albatross in excess of US$330 million, AirZim had become unattractive to many investors, prompting government assume the airline’s liabilities.

Information gathered from highly-placed sources indicates an audit into AirZim was concluded after which cabinet resolved to clean up the balance sheet. This has renewed interest among regional and global airlines that are relishing the prospect of partnering with the state carrier.

According to sources at AirZim, the airline will immediately require about US$45 million to modernise its systems, acquire new aircraft and match its regional counterparts as part of the restructuring exercise that is expected to run between 2017 and 2020.

Transport minister Joram Gumbo confirmed to the Zimbabwe Independent that the restructuring of the national airline was on track after cabinet recently approved a crucial debt take-over.

“Cabinet three weeks ago approved the debt takeover which then frees the company’s balance sheet and enables me to go back to the people that I have been negotiating with around partnerships,” Gumbo said, although he would not be drawn into discussing key details of the strategic turnaround document.

“I have a long list of potential suitors and the cabinet decision makes my job easier.”

The new plan will also see the airline acquire at least three new Embraer aircraft for regional and local flights at a combined cost of US$6 million.

Upon replenishing the AirZim fleet, government wants to open new routes in the region, including flying to Lagos and Accra, while international routes will also be opened to at least five destinations in various continents, including London, the Netherlands, Bahamas and China.

Recent Posts

Stories you will enjoy

Recommended reading