LAM SUSPENDS ACQUISITION OF NEW AIRCRAFT

Mozambique Airlines (LAM) has suspended the acquisition of new aircraft and the opening of any further routes, because of the company’s difficult financial situation.Back in 2014, the company’s then Chief Executive Officer, Marlene Manave, declared that LAM was acquiring three Boeing 737 Next Generation aircraft, which would be delivered in 2015, 2016 and 2017.First came a postponement, with the arrival of the first of the new Boeings delayed until November this year, and now has come the suspension of the entire deal.

 With no new aircraft, plans for LAM to fly to the capitals of all member states of SADC (Southern African Development Community) have also been put on ice.Indeed, one of LAM’s existing regional routes has already been shelved. In June, LAM suspended its flights between Maputo and Luanda, which were making a heavy loss, and announced that they would resume “as soon as market conditions make this possible”. LAM chairperson Antonio Pinto de Abreu told reporters of the company’s decisions on Monday, during a meeting of the Consultative Council of the government’s Institute for the Management of State Holdings (IGEPE). “LAM has decided to retreat from the decision to buy new aircraft because it is unable to pay for these acquisitions”, he said. LAM had already paid Boeing some money upfront, and Pinto de Abreu said contacts with American aircraft manufacturer are under way in an attempt to recover this money. 

Up to this year, the top management of LAM had presented the image of a financially healthy company, but in reality it ran at a heavy loss. Pinto de Abreu said that six months ago LAM had debts of 160 million US dollars. The new LAM Board which he heads had set about tackling the debt and had brought it down to 139 million dollars.“LAM is not in a healthy situation”, said Abreu. The accounts for 2015 “show the company has a deficit arising from structural motives”. Among the problems was the nature of the LAM fleet. Past managements had purchased several different types of aircraft (mostly Boeing, Embraer and Bombardier), which meant the company needed to manage accessories and spare parts for all these different makes, and train pilots and technical staff to handle them. Reducing this diversity of aircraft, said Abreu, would reduce costs, because the same training could be given to all staff, and the aircraft could be used in all of Mozambique’s airports.