AIR Zimbabwe needs an emergency cash injection in excess of US$50 million which would prevent the ailing national airline from collapse, a senior official said.
The national carrier, whose senior managers were implicated in serious corruption in an insurance scam, is operating on an “unsustainable shoe-string budget” and urgently requires a dose of fresh capital.
Some of the immediate financial requirements by Air Zimbabwe include US$10 million to US$12 million for route expansion, US$5 million for fuel support, US$3 million for interconnection systems, between US$4 million and US$5 million for revamping information technology systems.
Air Zimbabwe also requires an additional US$8 million to refurbish its planes and money to pay outstanding wages, a source said.
While the airline is in urgent need of working capital, the only viable capital raising plan at its disposal is the US$50 million it intends to raise through Aero Bills in April.
According to a schedule gleaned by The Herald Business, Air Zimbabwe intends to issue the aero bills on April 21 this year, provided it obtains all regulatory support from relevant authorities.
These include a letter of support from the Ministry of Transport and Infrastructure Development, approval for liquid asset status from the Reserve Bank of Zimbabwe, prescribed asset status from IPEC and approvals for tax exemptions from Zimra.
The source, however, said there was need for a temporary bailout to keep airline in the skies.
“This will help the company maintain its current routes . . . at least to remain operating,” said the source. “The situation is dire and the budget we are operating with is unsustainable.”
Air Zimbabwe chairman Mr Ozias Bvute could not be reached for comment last Friday.
Air Zimbabwe, once one of the most vibrant and safest airlines in Africa has, over the past few years, been facing operational challenges due to mismanagement and corruption.
The national airline is sitting on debt of over US$200 million that is owed to various creditors and it has depended on Government bailouts now and again in recent years.
Air Zimbabwe planes were grounded in April 2011 after the Civil Aviation Authority of Zimbabwe reportedly indicated that the planes had passed their design service time limit of 20 years and were increasingly becoming expensive to run. The authority further noted that the aeroplanes were a danger to passengers.
Air Zimbabwe resumed domestic flights a few month later after securing a US$8,5 million bailout from Government. Recently, a local audit company alleged the airline could have been prejudiced of €5 895 695,49 and US$1 298 827,88 — totalling around US$10 million — in a four-year aviation insurance scam involving top management.
Airzim company secretary Mrs Grace Pfumbidzayi is at the centre of the alleged scam, having authorised fraudulent payments to Navistar Insurance Brokers, according to the report.
BCA Forensic Audit Services has recommended not only that criminal proceedings be instituted against those implicated, but also says the matter must be brought to the attention of President Mugabe due to its magnitude.
This is because for a period of about two months, Air Zimbabwe aircraft took to the skies without any insurance putting passengers at risk of receiving no compensation in the event of problems.