Air Zimbabwe seek $15m from van Hoogstraten

Published: 01 November 2013

AIR ZIMBABWE has begun discussions with the tough-talking multi-millionaire investor, Nicholas van Hoogstraten, which could see the British tycoon availing an undisclosed sum to the beleaguered national flag carrier for aircraft acquisitions and repayment of massive debts in Europe sources have revealed.

The move is meant to facilitate the re-launch of flights on the money-spinning Harare-London route next month, the Financial Gazette reported.

Government sources familiar with the discussions said the property magnate had agreed to a proposed deal by AirZim but had tabled several conditions, which the AirZim board was still considering.

If the board, and consequently government, which wholly-owns Air Zimbabwe, agrees to the deal with van Hoogstraten, the British tycoon is understood to be ready to immediately inject up to $15 million in working capital for the resumption of the Harare-London flights.

Fingaz reports that the tycoon will get a 180-day commercial paper after injecting the funding.

AirZim is expected to deploy the cash to settle an overdraft facility estimated at about $$2,5 million and channel at least $3 million towards unpaid landing debts in London, a source familiar with the transaction said.

An executive at a bank that is handling the transaction said AirZim would use about $500 000 to rehabilitate and carry maintenance work on one of its Boeing 767s that is currently grounded.

Van Hoogstraten has also agreed to purchase two new Boeing 777 aircraft for the Harare-London flights and proposed that AirZim reconfigures the route to include Johannesburg, reliable government and AirZim sources said. But the Bvute-led board would have to agree to conditions proposed by van Hoogstraten, which include the formation of a new company in London, fully controlled by the British businessman that will manage the flights.

Commenting on the AirZim deal, a source said; "Van Hoogstraten has agreed to pay $8 million in outstanding overflying debts, which are critical if the airline is to be allowed to land in London."

"He says if the AirZim board agrees, he will buy two B777s for the Harare-Johannesburg-London routes. But he wants total control of management and finance.

"He wants to make sure that on every flight there are no free tickets, which he feels have been killing the airline."

Van Hoogstraten declined to comment on the deal this when contacted during his visit to the country last week.

The 300 to 370 seater B777 is one of the largest twin-engine airliners in the world, spanning the capacity between the B767 and the B747.

Van Hoogstraten feels it would be the best aircraft for the Harare-London route.

AirZim, which has 767s in its fleet, which can be used for the Harare-London flights, has been trying to introduce a fresh taste on its routes, after the recent lease of two A320s from France, which have been flying on its regional routes since the airline re-launched flights in November last year.

It had grounded its entire fleet in July 2011 after encountering working capital constraints.

The airline's board has been looking at the possibility of leasing Airbus 330s (A330) to use on the route, where competition is cutthroat, and only latest aircraft ranges are likely to attract viable traffic.

In addition to local flights, AirZim has been operating the Harare-Johannesburg and Victoria Falls-Johannesburg flights.

During the United Nations World Tourism Organisation's annual general meeting in August, the airline had indicated that it would introduce three more routes in southern Africa starting this month.

This did not happen.

AirZim had indicated that it had completed research on the viability of two weekly flights on the Harare-Durban route and three weekly flights on the Harare-Lusaka and Harare-Lilongwe routes.

AirZim, which collapsed under the weight of massive debt and depleted passenger numbers in 2011, has been on an aggressive domestic and regional route network expansion since bouncing back in November last year.
- fingaz

Tags: AirZimbabwe,