Maputo, Oct. 28, 2024 (Lusa) - Fly Modern Ark (FMA), which left the restructuring of Mozambican airline LAM, points out that the state-owned airline needs €9.2 million to continue operating and is willing to return to the process.
In a note sent to Lusa, FMA, which left the LAM restructuring process on 12 September after 15 months, said that the Mozambican airline's fleet had ‘shrunk to three aircraft from ten’ during the period of management by the South African company, and was now in ‘urgent need of support’.
‘Without a government bailout of at least $10 million [€9.2 million], LAM's future remains uncertain,’ says the FMA.
Theunis Christian de Klerk Crous, from FMA, told Lusa at the time that the agreement between Mozambique Airlines (LAM) and FMA, the South African company that led the restructuring of the Mozambican flag carrier, ended on 12 September.
‘We had a contract with LAM, and the contract ended. We did what we were contracted to do,’ explained Theunis Crous, an FMA partner who served as interim director of LAM between February and July this year as part of the Mozambican flag carrier's restructuring plan, which began in 2023.
The contract between FMA and LAM had been in force since April 2023, when the South African company was called in to implement a strategy to revitalise the company after years of operational problems related to a reduced fleet and lack of investment, with a record of some non-fatal incidents associated by experts with inefficient aircraft maintenance.
In a statement signed by Theunis Crous, the FMA said it viewed with ‘great concern’ LAM's suspension from the International Air Transport Association's (IATA) inter-company compensation system ‘for failing to honour its commitments’.
‘During the FMA's involvement, IATA management was a focal point as it represented a significant loss of money for LAM. The FMA took decisive action to suspend all payments to suppliers through IATA, successfully managing to control IATA-related costs. However, since the FMA's departure, there has been a reported increase in spending, with supplier invoices sent to IATA totalling €$3 million [2.8 million],’ the statement warned.
‘In addition, it has come to our attention that suppliers and service providers have not been paid, leading to an increase in air ticket prices - a stark contrast to the 30% price reduction that the FMA implemented during its leadership,’ it adds.
The company also says that the agreement reached in July, which led to the appointment of Américo Muchanga as LAM's new president, ‘marked a smooth transition to new leadership’, with the FMA expressing ‘its willingness to collaborate in the future if necessary’.
‘The period under the guidance of the FMA was fundamental to the stabilisation of the airline, despite the need for greater fleet renewal and efforts to maintain operational viability,’ the company describes, recalling that it “had just 15 months to tackle the complex task of restructuring LAM”, which “many considered impossible”.
‘While significant progress has been made, no restructuring effort can be fully realised in such a limited time, contributing to LAM's current challenges. The FMA remains committed to supporting Mozambique's government and people and is ready to help revitalise the economy, drawing on its vast experience in the Mozambican, regional and international airline sectors,’ it added.
In the same document, the FMA recalled that its intervention in LAM ‘came at a critical time’ when the Mozambican airline was ‘facing serious financial challenges, including debts of approximately $400 million [€370.4 million]’.
PVJ/ADB // ADB.
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