Gumbos’s full statement on Zim Airways


Dr Jorum Macdonald Gumbo

I wish to make a Ministerial Statement as has been requested by Hon. Members of Parliament through a request by Hon. Maridadi, on the Zimbabwe Airways issues and the Geiger International issue on the Beitbridge-Harare-Chirundu Road.

1. Zimbabwe Airways (Pvt) Ltd

A. Background

Mr. Speaker Sir, at its meeting on 20th October 2011, Cabinet constituted an Ad hoc Cabinet Committee to look into the revitalisation of Air Zimbabwe (Pvt) Ltd. This decision was occasioned by the fact that operation had been halted. The Committee comprises of Ministers responsible for Transport, Communications and Infrastructural Development, Finance and Economic Development, State Enterprises and Parastatals, Tourism and Hospitality, Environment and Natural Resources Management and Industry and Commerce.

Mr. Speaker Sir, on the 28th of February 2012, the Committee presented its recommendations and the Cabinet, among others, made the following decisions;

i. A new State owned company known as Zimbabwe Airways (Pvt) Ltd be formed;

ii. that an Interim Board of Directors be established; compromising of Senior Government officials, to manage the Airline’s affairs pending appointment of a substantive board by the responsible Minister; and

iii. an external/financial consultant be engaged to come up with a report bearing proposals on the business model and other issues pertinent to the successful turnaround of air Zimbabwe.

B. Implementation of Cabinet Decision

Mr. Speaker Sir, in implementing the Cabinet decision the then Minister of Transport, Communication and Infrastructural Development, Hon. Goche:

i. established the new airline under the Companies Act [Chapter 24:03] which was registered as Zimbabwe Airways (Pvt) Ltd, registration number 3015/2012. This name was adopted because during name searching at the company Registration Office, it was noted that the name Air Zimbabwe (Pvt) Ltd was already registered. The new airline obtained an Air Service Act Number 13 of 2012 valid for the period April 2012 to April 2015. The First directors of the company as per the requirements of the Companies Act were Mr. Andrew Bvume from the Ministry of Finance and Economic Development and Ms. Angeline Karonga from the then Ministry of Transport, Communications and Infrastructural Development. The Secretary was Mr. Luckson Madzinga from the then Ministry of Transport, Communications and Infrastructural Development;

ii. established an interim board and the board was chaired by the then Permanent Secretary in the Ministry of Transport, Communications and Infrastructural Development, Mr. Patson Mbiriri. Other Members of the Board were Permanent Secretaries in the Ministries of Finance and Economic Development, State Enterprises and Parastatals, Tourism and Hospitality, Environment and Natural Resources Management and Industry and Commerce; and

iii. authorised the engagement of Ernst and Young Zimbabwe on 14th May 2012. The consultants’ terms of reference, among other things included developing business model for the new airline, validation of the assets and liabilities, identification of potential strategic partners and evaluating the best approach in establishing the new airline.

C. Findings by the Consultants

The Consultants presented the Air Zimbabwe challenges which were mainly emanating from the following factors:

i. huge debt overhang which made the entity unattractive for strategic partnership. The debt rose from unpaid creditors and interest on debt which accrued every month. The debt then was sitting at US$282 million. Among the creditors were workers who were owed salaries and retrenchment packages;

ii. There was mismatch between the Airline’s fleet and its huge staff complement; and

iii. the airline possessed an old fleet that was expensive to operate, the new airline hence would only agree to render services to the new airline as a premium.

Following these recommendations, the Minister then shelved the operationalisation of the new airline while the Ministry engaged the Ministry of Finance and Economic Development on the debt issue.

D. Resuscitation of Zimbabwe Airways (Pvt) Ltd

Mr. Speaker Sir, between 2012 and 2017, the Ministry of Transport and Infrastructural Development sought authority from the Cabinet to seek for Strategic Partners for Air Zimbabwe (Pvt) Ltd.

At its meeting on the 10th of March, 2015, Cabinet resolved that the Ministry of Transport and Infrastructural Development submit to it the following:

i. a list of possible Strategic Technical Partners for Air Zimbabwe;

ii. strategy for engagement; and

iii. as proposed acceptable shareholding structure.

The Ministry was also tasked to benchmark the plan with international best practice, particularly with respect to the regional airlines that had undertaken similar projects.

Efforts to secure a strategic partner were hampered by two major issues, namely the debt situation which remained unresolved despite Cabinet approving its takeover and the non-availability of audited accounts in the airline since 2009. Matters came to a head in 2016 when the management at the Air Zimbabwe then, sought to re-launch the Harare-London route without consulting the Ministry and the CAAZ submitted their application to the European Aviation Safety Agency (EASA). During the same period that the management made the application to EASA, they had received the results of the IATA Operational Safety Audit (IOSA audit, which results were not positive.

The Government of Zimbabwe as the State party to the international Civil Aviation Authority Organisation (ICAO), the Civil Aviation Authority of Zimbabwe (CAAZ) as the aviation sector regulatory authority in Zimbabwe and Air Zimbabwe Limited as the national carrier and offending party, were summoned to appear before the European Union Air Safety Committee on 26th April, 2017 in Brussels, Belgium.

Subsequently, in May 2017, under references ARES (2017) 246318 Zimbabwe updated the community list of air carriers subject to an operating ban within the European Union in the framework of regulations (EC. Number 2111/2009), Air Zimbabwe was then banned from flying or over flying the European Union air space.

The Ministry, on behalf of the Government of Zimbabwe, being desirous to continue air space operations through a national carrier then resuscitated the operationalisation of Zimbabwe Airways Private Limited in July 2017. The Ministry renewed the air service permit for Zimbabwe Airways and is valid until July 2020.

Purchase of aircraft

Mr. Speaker Sir, in October, 2016 Air Zimbabwe approached the State Procurement Board to seek authority for the purchase of four Boeing 777 second hand aircraft from Malaysia. SPB approved Air Zimbabwe’s request in November, 2016. Air Malaysia offered the Government the four aircraft for a purchase price of US$70 million in total. The Zimbabwe Aviation Leasing Company was then informed to ensure that the aircraft would not be attached by creditors who were after Air Zimbabwe property. To date, a payment of US$41 million has been made and the balance of US$29 million is outstanding. Government has since received delivery of the first aircraft on 11 April, 2018.This covers the issue of Zimbabwe Airways and its history to-date.

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