After decades of haemorrhaging money and running at a loss, Mozambique’s flag carrier, LAM (Linhas Aéreas de Moçambique – Mozambique Airlines) has decided to take on a management partner that is expected will help turn its fortune around.
Mozambique’s Transport and Communications Minister Mateus Magala told the press that starting in April, LAM will be run by a committee of international managers under a Management Concession Agreement of up to a year.
It was later reported that the management partner is South Africa’s Fly Modern Ark.
Comment
Mozambique might have been inspired by the fortunes of TAAG (Angola Airlines), which had entered in September 2014, in a 10-year Management Concession Agreement with Emirates. Emirates managed to slice TAAG’s loss from $175 million a year to $5 million. However, the agreement was cut in 2017 after the Emirati carrier ran into trouble trying to get $340 million in revenue out of Angola – LAM’s debt stands at $300 million.
Mozambique’s Frelimo ruling party has in the past made it clear that LAM should never be privatised. So, the move to enter into a Management Concession Agreement makes more sense. Furthermore, saddled with liabilities, LAM would have serious challenges attracting buyers at a fair price.
Also, perhaps foreign managers will be able to curb much of the corruption and mismanagement that takes place in LAM and might be behind the huge debts.
Key to the agreement will be to efficiently ply current routes and maybe open new ones in an attempt to be a hub for hinterland countries, such as Zambia and Malawi.
Mozambicans will be hoping to see air fares fall.
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