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Moroccan firm wants Air Malawi dissolved |
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Written by Thom Khanje
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Tuesday, 02 March 2010 |
 A Moroccan company, which overhauled an engine for Air Malawi 737 500 in 2007, has applied to the Commercial Division of the High Court of Malawi for the winding up of the airline over an unpaid debt of over K500 million for the services.
Snecma Morocco, through a local law firm Chisanga & Tomoka, wants Air Malawi to be liquidated so that the debts owed to it should be paid through sell of the company’s assets.
According to Notice of of Petition for the Winding Up of the Air Malawi published in the local press on Monday, the case has been slated for hearing before Justice Frank Kapanda at the Commercial Court in Blantyre on March 25 this year.
Air Malawi chief executive Wisdom Mchungula yesterday said he was unable to comment on the matter but Secretary to the Treasury Joseph Mwanamvekha said people should not be worried about the notice because Air Malawi “will be there”.
“You don’t have to worry about that. Air Malawi will still be there. Things are under control,” said Mwanamvekha, without elaborating.
Earlier, government officials told the Public Accounts Committee (Pac) of Parliament that it has rescinded its earlier decision to liquidate Air Malawi and will instead workout a package to bail out the airline from its debts.
Mchungula himself told Pac that Air Malawi’s debts stood at K4.1 billion and that the airline could not service the debts on its own.
He said the national flag carrier " urgently needs shareholder support" to get its head above the water and swim to safety.
The Government is the sole shareholder of the parastatal.
“Management of Air Malawi believes that for the company to be put on stabilised financial footing, a relief on the debt should be given by the shareholder injection of funds into the company,” said Mchungula.
Mchungula blamed the debt burden to an “inherited” expansion programme the airline embarked on in 2005 which saw the company acquiring a Boeing 737 500 aircraft at a cost of K140 million with a loan from the PTA Bank.
He said the situation was compounded by the rise in world fuel prices on the world market between 2007 and 2008 and the subsequent global economic downturn which caused a substantial decline in both business and leisure travel.
Mchungula said the airline’s inability to implement its expansion strategies rendered the newly acquired Boeing 737 500 surplus to its requirement, which led to the aircraft being leased to Rwandair.
“This was a lucrative arrangement which earned Air Malawi K50 million a month,” said Mchungula.
He said however that towards the end 2008, both engines of the Boeing 737 500 expired and needed to go for overhaul but the airline was unable to undertake the exercise due to financial constraints and lost the deal with Rwandair.
The aircraft is now parked in Johannesburg while the Boeing 737 300 is also grounded and both require K928 million to be returned into service.
Mchungula told the parliamentarians that the airline only needs K1.8 billion of the K4 billion to get into normal operations.
“The major component of the financial requirements is for the overhaul of the B737 engines. Two engines are at TAP Engineering and Maintenance facility in Portugal whilst one engine is at SNECMA in Morocco . The return of both B737 aircraft depends on payment of the overhaul of these engines,” said Mchungula.
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