Africa-Press – Mozambique. LAM Mozambican Airlines losses soared to 3.977 billion meticais (€62.1 million) in 2023, forcing the state to inject 1 billion meticais (€15.6 million) and issue a comfort letter in 2024.
Mozambican Airlines (LAM), which has not publicly released its accounts, recorded losses of 448.6 million meticais (€7 million) in 2022, which soared the following year, according to the most recent available financial statements, which Lusa had access to today.
The Mozambican airline has been facing operational problems for several years related to a small fleet and lack of investment, with a number of non-fatal incidents attributed by experts to poor aircraft maintenance. It is currently undergoing a major restructuring process.
Despite the accumulated losses that year, when the state-owned airline was managed by South African airline Fly Modern Ark (FMA), LAM’s service sales grew 4% in 2023 compared to the previous year, reaching 8.813 billion meticais (€118.7 million), according to the report.
The document states that LAM “obtained a commitment” from the majority shareholder “to provide the necessary resources” to enable the company to “fulfil its obligations and commitments” to third parties, through a comfort letter dated October 7, 2024, issued by the State Participation Management Institute (Igepe).
“Furthermore, it understands that, in 2024, with a rigorous and realistic budget, both with the support of shareholders and with internal and external measures, it will have at least sufficient liquidity to fulfil its commitments,” management predicted in the report.
The document adds that, then, “given the loss recorded” in the fiscal year “of 2023 and in previous years”, and because the company closed that year’s accounts with negative equity of 19.67 billion meticais (US$291.4 million/€265 million), compared to 16.765 billion meticais (US$307.5 million/€225.8 million) in 2022, and current assets “were less than current liabilities” amounting to approximately 18.641 billion meticais (US$281.4 million/€251 million), the carrier’s continued existence was in question.
“Aware of this situation, the board of directors appealed, through several presentations to shareholders regarding the company’s situation, and proposed measures, some short-term and others strategic, to maintain the company’s sustainability,” the report reads, adding that in the fiscal year ended December 31, 2023, the state “made accumulated supplementary payments amounting to 1,017,393,669 meticais [€13.7 million].”
The President of Mozambique, Daniel Chapo, said on April 28 that there are “foxes and corrupt individuals” within LAM, with “conflicts of interest” that prevented the company’s restructuring in the first few years. 100 days of governance, including the goal of acquiring three aircraft during that period.
The crisis led the company to virtually cease international flights this year, focusing on domestic flights. It also led to a new administration in May and the entry of Cahora Bassa Hydroelectric Plant (HCB), Mozambique Ports and Railways (CFM), and the Mozambican Insurance Company (Emose) as shareholders.
To minimize recurring flight cancellations, the company plans to acquire five Boeing 737-700 aircraft and, pending this purchase, has launched a tender to lease another five.
On May 13, Igepe also announced the dismissal of LAM’s management and the appointment of a management committee chaired by Dane Kondic, 60, a dual Serbian and Australian national, former CEO of Air Serbia and former chairman of the board of directors of the Portuguese airline euroAtlantic.
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