Home » Business » Air Zim Requires U.S $1 Billion to Recapitalise

Revival of Air Zimbabwe solely hinges on partnerships and the Ministry has compiled a list of potential investors which shall be tabled before Cabinet.

AIR Zimbabwe is currently operating on a monthly deficit of US$3,25 million and requires a capital injection of US$1,068 billion to fully recapitalise and re-equip.

Transport and Infrastructure Development Minister Obert Mpofu told a Parliamentary committee on Monday that the airliner remains a loss making entity until it is capitalised and re-equipped.

“The equipment is inadequate to operate viably, Air Zimbabwe is a loss making entity generating an estimated revenue of US$2,65 million a month against operational expenditure of US$5,9 million,” he said adding that the airline only has five airlines.

In total, the airline requires a capital injection of US$1,068 billion which would go towards a turnaround strategy which includes the purchase of three small jets, two Boeing 737 and two Boeing 787 at a total cost of US$770 million.

“The estimated total cost of equipment plus debt of US$298 million implies that government has to inject a total of US$1,068 billion.

“But given the challenges on fiscus, it is difficult for the shareholder to inject such capital hence the need for partnership,” he said.

Mpofu said the revival of Air Zimbabwe solely hinges on partnerships and the Ministry has compiled a list of potential investors which shall be tabled before Cabinet.

The total debt of US$282 million as at January 2015 emanates from navigation landing and handling fees, fuels, and rentals among others.

Mpofu said the national airliner is overstaffed with a wage bill of over US$1,2 million per month including statutory obligations but is constrained to raise the money for retrenchments. It has earmarked 234 for retrenchments while 526 are active and 40 are on apprenticeship.

Source : Financial Gazette

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