Fly Modern Ark, the consultancy hired by the government to recover Linhas Aéreas de Moçambique (LAM), reported this Tuesday, 29 August, during a press conference, that the company is now fully solvent.
“Today, after three months of work, we are announcing that LAM’s debt has been reduced by 61.6 million dollars. Remember that on 29 May, when we carried out the first intervention, the debt was reduced by 47.3 million dollars and, after that, it was a further 14.3 million dollars,” announced Sérgio Matos, LAM’s restructuring project manager.
When FMA took over management of the company, it had an estimated debt of around 300 million dollars, according to figures provided at the time.
The source explained the reasons behind the result achieved, saying that “it is the result of correct entries of transactions in accordance with international accounting standards, generally acceptable accounting practices and the National Treasury’s accounting guidelines, further reducing the debt position. Debts against debtors totalling 23 million dollars were also cleared. As a result, LAM is now technically solvent.
Sérgio Matos pointed out that Fly Modern Ark’s intervention team had assessed and analysed the invoice submitted by South Africa Technical – the entity that maintains LAM’s aircraft in relation to the Boeing C-9B – which noted that there were duplicate charges. “An invoice of just over 11,000 dollars was reversed,” he explained. “After Fly Modern Ark’s involvement in negotiations with AerCap, the entity that leases the aircraft, the Boeing C-9B aircraft, which was contracted to return in February 2023, was returned early, thus reaching an amicable agreement that translates into cost savings of 3.4 million dollars in LAM’s favour,” said Sérgio Matos.
The manager also said that the airline is in negotiations with the manufacturer Boeing for the reimbursement of 23 million dollars resulting from the pre-payment of a new aircraft that was never delivered to the company and that, over the years, LAM has lost large sums of money on aircraft that are grounded for long periods due to technical reasons. He also said that the launch of the Vilanculos-Johannesburg and Beira-Johannesburg flights on 6 August 2023 had been a huge success.
“Passenger volumes and revenues are higher than expected. Future bookings are encouraging with occupancy exceeding 50 per cent on most flights. It was projected that the initial load factor for the first month, i.e. from 6 August to 5 September 2023, would be 35%, but all indications show that an average of over 50% will be achieved,” said Sérgio Matos.
The head of LAM’s restructuring project spoke of the comparative financial performance of the first three months of 2022 and 2023, where it was noted that in terms of passengers, in 2022 there were 141,000 and this year there were 161,000 passengers, which means an increase of 14 per cent. In terms of revenue, in 2022 there were 1.9 billion meticais, but in 2023 there were 2 billion meticais, which means an increase of 6 per cent. “In terms of operational punctuality, in 2022 we had 70 per cent and this year we have 81 per cent, which means a positive variation of 16 per cent,” he said.
In the first quarter of 2022, LAM carried out 2625 flights and, in the same period this year, 2951 flights were recorded, which means a positive variation of 12 per cent.
“With regard to the impact of the 30 per cent reduction in fares on the six routes, our projection is that there will be a 20 per cent increase in passengers and a 10 per cent increase in revenue. For the first three months of the year, we had 96,000 passengers, totalling 1.1 billion meticais in revenue,” said Sérgio Matos, who explained that this difference was due to the increase from seven to ten aircraft in the company’s service.