Zimbabwe splurges $1 billion on planes

ZIMBABWE'S cash-strapped government has spent nearly $1 billion on procuring Boeing 777-200ER planes from Malaysia Airlines, as it sets up a new airline to be run by President Robert Mugabe's son-in-law.

Images of one of the planes, branded Zimbabwe Airlines, on a two-hour demo flight from Subang airport in Malaysia, emerged on Saturday, triggering speculation that loss-making national carrier Air Zimbabwe would rebrand and lease equipment.

Interestingly, Malaysia Airlines Berhad emerged from the ashes of its troubled fore-runner, Malaysia Airlines System Berhad in 2015. The airline, which began restructuring in August 2014, mutating into a new company, is reducing its long-haul fleet, including its 12-year old Boeing 777s. The airline lost two Boeing 777-200ERs in accidents in March and July 2014.

The development appears to have caught both the board and executives at Air Zimbabwe by surprise, with a senior official telling the Financial Gazette that the closely guarded plans entailed the purchase, not leasing, of planes and the creation of a new airline altogether.

A company with the name Zimbabwe Airways is registered at the companies registry in Harare, but its file 3015/12, could not be located.

Well-placed sources said it has been government's plan since 2012 to shut down Air Zimbabwe and start a new company, trading as Zimbabwe Airways.

Government has failed to revive Air Zimbabwe, which has a $330 million debt and would require, according to Parliament's portfolio committee on transport, about $1,3 billion for recapitalisation.

Air Zimbabwe chief operating officer Simba Chikore, Mugabe's son in law, has been spearheading efforts to acquire the new planes, together with Transport and Infrastructure Development Minister, Joram Gumbo. The rest of the executive team at Air Zimbabwe, led by chief executive officer Ripton Muzenda, has not been involved in the acquisition of the planes. The parastatal's board, chaired by University of Zimbabwe academic Chipo Dyanda, has also not been involved.

Contacted for comment this week, Dyanda said she was not briefed on the acquisition of the new aircraft, as well as the formation of a new airline.

Gumbo, who has previously announced plans to procure planes, told the Financial Gazette: "I will talk when I am ready. At the moment I am not ready to talk about those issues. I have been scouting for planes and people are already speculating. I cannot be drawn into commenting on that prematurely.

Mugabe took Gumbo and Chikore to Malaysia late last year, and the minister has previously revealed he had gone to pursue aircraft deals.

It was not immediately clear how Mugabe's broke government, which is seeking debt relief internationally and racking up debt to fund a budget deficit domestically, intends to fund the aircraft procurement.

A Boeing 777-200ER plane is currently listed at around $260 million.

Airline industry sources said while funding plans for the new airline were still shrouded in secrecy, they suspect underhand financial arrangements similar to those employed in the lease of two Airbus planes by Air Zimbabwe in 2012. Last year, Parliamentarians heard that the airline was still paying $400 000 per month for the planes to Sonagol, owned by the ruling ZANU-PF party's benefactor, Sam Pa, who is currently incarcerated in China.

It is estimated that Air Zimbabwe has so far paid $30 million to Sonagol in lease fees.

The Financial Gazette understands that government will take delivery of four 777 aircraft in the coming few weeks.