Air Zimbabwe is facing the prospect of liquidation after being placed under judicial management following its debt level rising above US$140 million.
Last week Zimbabwe’s High Court appointed a judicial manager for the struggling airline and barred the Air Zimbabwe board from any involvement with the company. The move came after unpaid employees sought an intervention from the courts.
A lawyer representing the Air Zimbabwe workers, Caleb Mucheche, told the state-owned Sunday Mail the High Court order was the first step in the liquidation of the flag carrier. He said the airline had failed to pay workers since January 2009 and had accumulated arrears of up to US$35 million by the end of last month.
“Since the court has appointed a judicial manager it means that this is a prelude to liquidation,” he said. “The judicial manager will now move in and the current Air Zimbabwe board will have to step aside.” He added that, “the judicial manager will assess if Air Zimbabwe is still a going entity but the way things stand, all is not well; he is likely to recommend liquidation. That is the process. Whenever a judicial manager comes in, the next step is liquidation.”
The High Court appointed Shepherd Chimutanda of STC International Certified Chartered Accountants as provisional judicial manager of Air Zimbabwe.
However, in a statement yesterday, acting chief executive Innocent Mavhunga said the High Court was still to make a ruling. “The airline was only served with a court application on Monday the 23rd of January 2012 in which certain individuals purporting to represent the workers are seeking to place the airline under judicial management,” Mavhunga said.
“The majority of the workers under the Applicant unions have distanced themselves from the court application which is clearly a mischievous but grievous assault on the interests of the workers. For this and other material reasons, the Airline will defend the matter most vigorously.”
Air Zimbabwe has had two of its aircraft seized over unpaid debts. On December 12, 2011, an Air Zimbabwe Boeing 767-200 was impounded at Gatwick Airport after American General Suppliers received a court order for US $1.2 million the airline owed for spare parts. The aircraft was only released on December 20 once the debt had been settled, but due to technical problems and a lack of spares the Boeing only left for Zimbabwe on December 24, arriving the following morning.
On December 2, Bid Air Services seized air Zimbabwe’s Boeing 737-500 over US$500 000 of unpaid debt. The aircraft was impounded shortly after landing at Johannesburg’s OR Tambo International Airport, as Bid Air parked a vehicle behind the aircraft to ensure it could not leave. Bid Air later allowed the aircraft to return to Zimbabwe.
In mid-December airline acting CEO Innocent Mavhunga said that Air Zimbabwe had suspended flights to South Africa over fears that its aircraft could be seized again, but said that flights were continuing to Zambia and the Democratic Republic of the Congo. Flights were later halted to the United Kingdom as well.
Air Zimbabwe has experienced numerous setbacks recently – in November flights were halted for a week whilst the carrier resolved a dispute with fuel suppliers. The carrier is losing around US$3.5 million per month.
Last week Mavhunga wrote to President Robert Mugabe warning him that Air Zimbabwe faced serious viability problems.
“We wish to advise that the non-payment of salaries and other statutory obligations for the period in question has not been deliberate but rather a manifestation of underlying viability challenges that our company has been experiencing where we have even suspended international and regional flights with domestic flights having become erratic,” reads part of the letter.
