The publicly-owned company Mozambique Airlines (LAM) has reduced its debt by around US$61.6 million in the last quarter, following various actions carried out by Fly Modern Ark (FMA), the South African consultant hired to revive the airline.
According to the LAM restructuring project manager, Sergio Matos, who revealed the figure on 29 August in Maputo, “this is the result of the correct posting of transactions in accordance with International Accounting Standards. The Generally Acceptable Accounting Practices (GAAP) and National Treasury Accounting Guidelines reduces the debt position”.
In the last three months, Matos said, there has been a reduction calculated at around US$14.3 million. Added to the previous US$47.3 million announced on 29 May, this brings the total debt reduction to US$61.6 million.
“LAM is now technically solvent”, Matos stressed.
According to Matos, FMA is now working to recover and forward to LAM’s coffers a sum in excess of US$20 million to purchase an aircraft.
“Negotiations are underway with Boeing for the reimbursement of US$23 million, an amount that LAM made in advance for the purchase of Boeings in the past but which then didn’t happen”, he said. “We are now in negotiations to recover this sum, and when this amount is reimbursed, it will further reduce the debt”.
LAM has also established new routes, including Maputo-Lusaka, and has reintroduced the Vilankulos-Johannesburg and Beira-Johannesburg routes.
In addition, LAM has re-established inter-provincial routes from the city of Beira that allow “passengers who want to go to Cabo Delgado or Nampula […] to leave from Beira to the provinces of the centre and north”. The results of this will determine whether or not a similar line is created from Nampula to other parts of the country.
Three more aircraft have been added to the LAM fleet. “When Fly Modern Ark started to operate, LAM had seven aircraft and only five were fully operational”, said Matos. “Now, three more have been added and all of them are operational, which means we have ten aircraft fully operational”, he said. The three aircraft added to the fleet are two CRJ900 and an Embraer 145.
The government, he explained, has a programme contract that was signed with LAM to cover the unprofitable routes (Maputo/Xai-Xai/Maputo, Maputo/Chimoio/Maputo and Maputo/Lichinga/Maputo) and these amounts were recorded as debt.
“There was also an injection of liquidity during the Covid-19 pandemic to support the company and this was also recognised as debt. What we did was contact these institutions and they gave us supporting documents to prove that it wasn’t a debt”, he added.
Asked if LAM had been mismanaged, Matos said he couldn’t say for sure. He only argued that FMA had brought pragmatism to management, because “the people are the same and the competence is the same”.