in Business & Finance

Fly Modern Ark eyes 25% stake in Air Zimbabwe

Posted 2 January 2018 · Add Comment

Fly Modern Ark has submitted a proposal to the Zimbabwean government in which the South African start-up would equip Air Zimbabwe with Xian Aircraft Company turboprop equipment in return for a 25% stake in the state-owned airline, reports ch-aviation.

Documents indicate Fly Modern Ark had valued its 25% stake at around USD220 million. Of that sum, USD193 million would be used to acquire ten new MA-60 turboprops for Air Zimbabwe along with two MA-600(F)s.

An additional USD16.1 million would be used for training, spares, tooling and technical support, while USD10.9 million would be spent on operations, safety and marketing. Air Zimbabwe is an existing MA-60 operator with three acquired from China during the last decade.

A separate carrier, Fly Modern Ark South Africa, would also be established in South Africa to feed traffic into Air Zimbabwe's Harare International hub. Management would be elected by both Air Zimbabwe and Fly Modern Ark.

Air Zimbabwe has been unable to attract any meaningful investment owing to a USD300 million debt overhang racked up during the former Robert Mugabe regime. However, following Mugabe's overthrow in a de-facto military-backed coup in November, Zimbabwe's newly installed president, Emmerson Mnangagwa, has attempted to shore up international support for his government's efforts to revive the moribund Zimbabwean economy.

Earlier this month, Transport minister Joram Gumbo told the Daily News in an interview that despite injecting fresh funds into the airline earlier this year, Air Zimbabwe was still making USD2 million in monthly losses. As such, given its poor financial standing, it had failed to secure any meaningful interest from potential strategic partners.

“Cabinet approved the recapitalisation of AirZim. After the approval, we went around to negotiate with at least 12 airlines which included two African airlines, Ethiopian Airlines and Kenya Airways," he said. "We also targeted Malaysia Airlines, Lufthansa, Qatar Airways, Turkish Airlines, Emirates, Qantas, Singapore Airlines, and Air China but we discovered that we were not going to succeed in our negotiations because AirZim’s financials are in shambles and they were not attractive to any one of the airlines to try and go into partnership with us."

According to the minister, despite Malaysia Airlines' unwillingness to partner Air Zimbabwe, it did signal its willingness to sell the carrier its fleet of B777-200(ER)s.

“So I started negotiating to buy and so I informed government that I had clinched a deal with Air Malaysia to buy four Boeing 777 planes at USD70 million for all of them and I thought this was a good deal for Zimbabwe. But again government failed to raise the money. I was buying these for AirZim," he said.

 

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