Thursday, September 6, 2012

► MALAWI: Air Malawi to be unbundled before privatization.

As Joyce Banda's Malawian government pushes on with its cost cutting measures aimed at freeing the ailing African nation's fiscus from millstone parastatals, up for sale is Air Malawi (QM) Ltd, in which the Malawian Government has pledged to honour all the national flag carrier's debts and liabilities as part of a deal sweetener. 

Operationally, Air Malawi has been swaggering from one crisis to another, even ceasing operations at one point last year, due to a lack of aircraft available to fly. Since resuming operations in March this year,  it has been using a leased Star Air Cargo Boeing 737-200Adv (MC# 22591 | ZS-SIL)and an in-house ATR42 to ply domestic and regional routes to Harare, Lusaka and Johannesburg. Financially, with the exception of 2007, Air Malawi has posted continuous losses, causing a massive drain on the already battered Malawian government coffers. In June, a cabinet meeting was called in which the airline's future was brought under the spotlight, culminating in today's announcement.

Discussing terms and reasons behind the sell off, Malawi's Privatisation Commission (the state entity overseeing the impending sale of QM) Chief Executive Officer, Jimmy Lipunga, said:
Air Malawi's ATR42
Air Malawi's ATR42 in Blantyre
"In order to sustain the country's Bilateral Air Services Agreements, the level of participation of Malawian nationals and government shareholding is supposed to be 51 percent. For this purpose, Air Malawi Limited excludes its wholly owned subsidiaries of Air Cargo and Lihaco as they will be delinked from Air Malawi Limited in a separate restructuring exercise."

This is not the first time Malawi has attempted to offload its national carrier. There were two previous attempts  under the Bingu waMutharika Government: in 2003, a deal awarded to South African Airways (SA) collapsed as the South African carrier proved reluctant to pay a USD250'000 security bond, preferring instead to focus more attention on their then interest in Air Tanzania (TC). In 2007 British Airways (Comair) was chosen as a potential partner for the airline, but that collapsed when a disagreement emerged over how the company would be carved up; Comair preferring a controlling stake of 80% whilst the Malawian's preferred a 51/49 partnership.

A lack of reliable and competitively priced air service in the country has led to a dramatic increase in fares amongst private operators; for routes taking no more than 45 minutes; some have even asked for USD100 one way from Lilongwe to resorts on Lake Malawi.