GOVERNMENT has cleared the path for the settling of claims of moribund flag carrier Air Zimbabwe’s creditors following a rigorous verification process, a move aimed at freeing the airline from legacy obligations which have often hindered chances of investments.
Following the first creditors’ meeting held late 2018 and subsequent updates, the administrator, Grant Thornton will now commence the settlement of both local and foreign creditors.
“The government has approved the settlement of creditors whose claims were proved and verified during the current reconstruction process. The Administrator and his team will commence negotiations and settlement of both local and foreign creditor in a phased approach,” said the administrator, Reggie Saruchera.
Air Zimbabwe, whose viability has been riddled by lack of equipment and a debt overhang, hopes that a fresh balance sheet will attract investors who have remained on the fence.
Government has in the past delayed the Air Zimbabwe debt assumption programme, thereby stalling the engagement of potential investors. Despite interest from 10 investors, Air Zimbabwe’s debt overhang remains a stumbling block to foreign capital.
The airline owes US$380 million. Of the US$380 million, US$30 million is owed to foreign creditors while US$292 million is government-to-government debt. But the resurfacing of other litigious creditors like the 300 workers that the Supreme Court ordered reinstated after they were fired five years ago further puts a strain on the administrator’s growth plans.
The company was quoted as saying it had no capacity to either reinstate or compensate the former workers who won the Supreme Court challenge.
Saruchera also said the reconstruction of Air Zimbabwe which began in 2018 should be complete by June, with the settling of creditors a top priority.
“In order to ensure that the aforementioned settlement of creditors claims together with the finalisation of other key strategic issues, the reconstruction of Air Zimbabwe is to be concluded no later than 30 June 2021,” Saruchera said.
Air Zimbabwe was placed under reconstruction following the disbandment of the Chipo Dyanda-led board by former Transport minister Joram Gumbo. The board and Gumbo clashed over the proposed turnaround strategy where the government was accused of deliberately sabotaging Air Zimbabwe in favour of a new airline linked to the late former president Robert Mugabe.
The disbandment of the board and subsequent appointment of a caretaker administrator were meant to safeguard the airline’s assets which have been under threat from litigious creditors.
Debt reconstruction is meant to facilitate the management of the airline’s debt and its subsequent amortisation. It is also meant to preserve the company’s assets and establish firm operations.
Saruchera also said the government had availed funds to purchase a second Embraer 145 aircraft to boost the depleted fleet. The Embraer is earmarked to service the domestic market at a sustainable cost.
Air Zimbabwe has been operating a long-haul aircraft on local routes, an unsustainable business decision for the moribund airline.
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