Communication - Presse

Flag carrier LAM no longer insolvent but still risks collapse

Mozambique Airlines (LAM) is no longer insolvent as it has collected US$47.3 million (€44.1 million) in state and private debt since April, but remains at risk of collapse, a company source said on Monday.

“The debt position has been reduced” improving the debt to equity ratio, leading LAM to no longer be considered insolvent,” said Sérgio Matos, a member of the company’s management committee.

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These operating gains are the result of the positive impact of intervention by South African company Fly Modern Ark, which began operating in April to restructure the Mozambican flag carrier, Matos said.

He pointed to the recovery of funds from unpaid air transport services and the end of selling tickets on credit as actions that are allowing for recovery.

These efforts have led LAM’s debt to fall, but not enough to stop it being high, at over US$300 million (over €279 million), Matos said.

For these advances “there was no injection of [capital] by the government,” the main shareholder of the company – the other shares are held by managers and workers – noted Matos, refusing to go into details due to the confidentiality of some clauses in the contract between the government and Fly Modern Ark.

Some debts to LAM, he continued, are uncollectible, because they belong to extinct debtors.

Sérgio Matos revealed that since April the price of the company’s tickets had been reduced by 30%, with a view to attracting more passengers and increasing the company’s revenues.

“In our view, it is a reduction for good and we can reduce it even more,” he emphasised.

Two aircraft arriving in two weeks

The recovery plan provides for Fly Modern Ark to inject “some money” into the carrier and put more aircraft into service, with two aircraft due to arrive in Maputo within two weeks, Matos advanced, so that new routes can be studied.

The aim, he said, was for LAM to have at least 14 to 15 aircraft as compared to the current seven, of which five regularly operate, as two are normally undergoing prolonged maintenance.

With more aircraft, LAM will be able to make its workforce more efficient. This workforce currently comprises 753 workers working on just seven aircraft.

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