Africa-Press – Mozambique. The debt of Linhas Aéreas de Moçambique (LAM) increased by 0.5% over three months, reaching 5,921 million meticais (€79 million) by September, due to payment delays, according to data from the Ministry of Finance.
The balance of the state-owned LAM’s domestic debt rose by 32.78 million meticais (€438,000) from the second to the third quarter, “resulting from delays in the payment of instalments,” according to the latest Mozambican public debt bulletin, contrasting with a 2.4% reduction in the second quarter compared to the previous one.
LAM will be able to pay the accumulated debt in annual instalments, which will still be guaranteed by the State with commercial banks, as authorised by a resolution approved on 2 September by the Council of Ministers.
In a statement, the Government said it had approved “the resolution authorising the payment of annual instalments of LAM’s debt, guaranteed by the State with commercial banks,” although without specifying amounts, within the ongoing process of restructuring the airline.
The Government also authorised, in the same resolution, the Institute for the Management of State Holdings (IGEPE), the entity that manages and coordinates the State’s business sector, to establish a special purpose vehicle (SPV) for the management and settlement of this debt.
A further resolution authorised the creation of an SPV owned by Hidroeléctrica de Cahora Bassa (HCB), Ports and Railways of Mozambique (CFM), Mozambican Insurance Company (EMOSE), and LAM shareholders, “whose main objective is to secure financing for the acquisition of the stake” in the airline.
LAM has not operated international flights for almost a year, focusing on domestic routes, which also led to new management in May and the entry of HCB, CFM, and EMOSE as shareholders.
To reduce recurring flight cancellations, the company has been acquiring and leasing new aircraft, the latest being a 148-seat Airbus A319, which arrived in Maputo in December.
LAM’s losses soared to 3,977 million meticais (€53.5 million) in 2023, forcing the State to inject 1 billion meticais (€13.7 million) and to issue a comfort letter in 2024, as reported by Lusa on 7 August.
LAM, which has not publicly disclosed its accounts, recorded losses of 448.6 million meticais (€6 million) in 2022, which then increased sharply the following year, according to the most recent available financial statements.
The company has faced operational problems for several years related to a reduced fleet and lack of investment, with some incidents recorded—non-fatal—linked by experts to inadequate aircraft maintenance, and is currently undergoing a deep restructuring process.
Despite the accumulated losses in that year, LAM’s service sales grew by 4% in 2023 compared to 2022, reaching 8,813 million meticais (€118.7 million), according to the report, which referred to the majority shareholder’s “commitment to provide the necessary resources” to enable the company “to meet its obligations and commitments” to third parties, “through a comfort letter dated 7 October 2024,” issued by IGEPE.
It added that, “given the loss recorded” in the 2023 financial year “and previous years,” and due to the company closing the year with negative equity of 19,670 million meticais (€265 million), compared to 16,765 million meticais (€225.8 million) in 2022, and current assets being “lower than current liabilities” by approximately 18,641 million meticais (€251 million), the airline’s continuity was at risk.
“Conscious of this situation, the board of directors appealed, through various reports submitted to shareholders on the company’s situation, and proposed measures, some short-term and others strategic, to maintain the company’s sustainability,” reads the report, adding that in 2023 the State “made additional instalment payments totalling 1,017,393,669 meticais (€13.7 million).”
