An analysis carried out by the Centre for Public Integrity (CIP) – a civil society organisation – concluded that the sale of Linhas Aéreas de Moçambique (LAM) to Hidroeléctrica de Cahora Bassa (HCB), Portos e Caminhos-de-Ferro de Moçambique (CFM) and Empresa Moçambicana de Seguros (EMOSE) could aggravate the sector’s fiscal risk and reduce transparency in the management of public resources.
CIP explains that LAM is a technically insolvent company and highly dependent on financial support from the state. ‘According to the financial statements from 2018 to 2021, the company recorded systematic losses throughout the period, reaching a net loss of more than 20.7 billion meticals (324 million dollars) in 2021. In addition, it had negative equity of 18.2 billion meticals (285 million dollars) and adjusted net debt of 17.4 billion meticals (272 million dollars).’
The organisation highlights the company’s lack of continuity in publishing its annual report and accounts. ‘Despite the obligation established in article 29 of the ESS Law (Law no. 3/2018, of 19 June), which requires the publication and auditing of the accounts of companies in the sector, LAM has not released its financial statement reports since 2021, which may signal a lack of transparency on the part of the company.’
With regard to financial support from the state, the organisation, citing the company’s 2021 financial statements report, reveals that in 2020, LAM benefited from 1.6 billion meticals (25 million dollars) in capital injections, due to the reversal of the amounts recorded in supplementary payments, and 75.6 million meticals (1.2 million dollars) in subsidies. In 2021, the company again benefited from 100 million meticals (1.6 million dollars) in capital injections.
In addition to the airline’s reports, the organisation cites the Fiscal Risks Report 2025 (published in 2023), in which LAM received a government subsidy of 255.4 million meticals (4 million dollars). The public debt report for the third quarter of 2024 indicates that the carrier is facing difficulties in honouring its financial commitments to creditors and, by the third quarter of 2024, its debt amounted to more than 7.1 billion meticals (111 million dollars).
LAM’s sale to public companies could worsen the public sector’s fiscal risk
‘The Fiscal Risks Report 2025 classifies the company as a high fiscal risk, highlighting its dependence on state intervention and the risk of the state being called upon to redeem any guarantee issued in its favour,’ the organisation points out.
CIP also recalls that in April 2023, when Fly Modern Ark (FMA) took over management of LAM with the aim of revitalising it, the company’s debt amounted to approximately 300 million dollars (19.2 billion meticals). At the time of its departure, in September 2024, the FMA declared that LAM urgently needed a financial injection of more than 10 million dollars (640 million meticals) to guarantee the continuity of operations, showing that the company’s financial situation was still alarming.
The organisation explains that the financial relationship between the state and the SEE materialises through financial transfers from the government to companies in the sector – via subsidies, the issuing of sovereign guarantees, letters of comfort, retrocession agreements, guarantees and debt service redemptions. ‘In return, the companies contribute to the State Budget (OE) by paying taxes and distributing dividends. This relationship could represent a fiscal risk if the outflow of financial resources from the state exceeds the companies‘ financial contributions,’ warns CIP.
According to the financial statements for 2018 to 2021, the company recorded systematic losses throughout the period, reaching a net loss of more than 20.7 billion meticals (324 million dollars) in 2021.It also had negative equity of 18.2 billion meticals (285 million dollars) and adjusted net debt of 17.4 billion meticals (272 million dollars).
‘Finally, LAM has a history of corruption and mismanagement, as denounced by the FMA. Among the fraudulent actions are the embezzlement of funds, the acquisition of property for the benefit of third parties, the existence of bank accounts abroad and ticket sales points (POS) operated by individuals with no connection to the company. The most recent situation was the return of a cargo aircraft that cost the carrier more than 3.9 million dollars (240 million meticals),’ says the analysis.
In the organisation’s opinion, this scenario indicates that, more than a simple injection of capital, LAM needs a profound administrative restructuring, accompanied by improvements in the transparency and accountability processes of managers.
For the restructuring of the sector to be effective, CIP argues that it is essential to adopt measures that reduce political and governmental interference in the management of the company. It also suggests the formation of a public-private partnership, with the entry of a strong strategic investor as a solution to mitigate the risks associated with political and governmental influence and promote more efficient and sustainable management.
