With Zambia's government admitting defeat in maintaining its national carrier, new contenders have lost little time in proposing a replacement. And Kenya Airways is readying itself for the transfer of up to 80 per cent of the state holding into the private sector.
A joint venture carrier between local businessmen and South African regional SA Express (SAX) could be operational within a month of government approval - which is still pending.
The joint venture would entail a 'roughly 50:50' ownership between the two parties, with a 'significant investment' on each side, according to William Deluce, chief executive officer of SA Express. Zambian newspapers have quoted startup costs as $7-10 million, with equipment financing near $60 million.
Deluce says local participants are vital, but they must pay their way in. 'We are looking for commitment in hard, cold dollars. We will bring airline equipment and expertise, and provide a better service for Zambia,' he says.
The operation would be modelled on SAX, flying domestic and short-haul routes, with South African Airways providing jet services, says Deluce. Alliance, the new joint African airline in which SAA has a 40 per cent stake, may enter into the agreement once it has established.
Details like aircraft and staff will be finalised once government approval is given, with the possibility of using SAX aircraft and staff for a quick start. SAX is keen to make use of the experienced personnel already in Zambia, but will put them through its own training scheme first.
The Zambian government has given the proposal high priority, and is anxious to restart some service especially domestically, where a few local charters are operating on an ad hoc basis to try to fill the gap in the country's infrastructure.
Meanwhile Kenya Airways' privatisation is likely to begin its first stage by March, when the information memorandum is due to go out to foreign carriers that have expressed interest in taking a stake of up to 30 per cent.
Both British Airways and Lufthansa have been touted as possible partners for the African carrier in the past. One London-based analyst speculates that Lufthansa may take the stake through its charter Condor, as Kenya is largely a leisure market.
A temporary local political furore was caused when Kenya Airways tried to maintain 'transparency and accountability'. December's presentation of an update of the privatisation process to the Kenyan parliament led some opposition politicians to believe that they could stall the procedure.
However government approval for privatisation has already been obtained and managing director Brian Davies is not worried. 'I do not anticipate it will have a significant effect on the process.'
The main difficulty in restructuring the carrier's debt was solved in July 1993, when the government agreed to a debt for equity swap for KES1.6 billion ($27.7 million) of accumulated debt. A second amount of KES4.57 billion ($79 million) was owed in foreign currency for loan default payments, and the Kenyan government has accepted responsibility.
This leaves the airline with approximately KES11 billion ($190 million) in aircraft repayments on three Fokker 50s and two Airbus A310s.
Along with the foreign partner, financial adviser International Finance Corporation has recommended that up to 10 per cent should be put into an employee share scheme and 30 per cent held by local institutional investors, with 35 per cent floated on the Nairobi stock exchange. The government will retain 20 per cent stake.
Elsewhere in Africa, Air Zimbabwe's commercialisation plans are also underway with the government promising to convert some of carrier's debt to equity. The carrier currently has a total capital of Z$500 million ($59.5 million) as debt, but after revaluation of assets this figure should double to Z$1.1 billion, says a source close to the airline.
Nigeria Airways is breathing a sigh of relief as the government has abolished its foreign exchange restrictions, making it possible for the carrier, the only international operator in the country to take fares in naira, to obtain hard currency more readily. The government has also announced it will entertain offers for a 10-year lease on the flag carrier. The abolition of the foreign exchange restrictions will also come as welcome news to foreign carriers serving Nigeria, some of which were threatening to suspend operations unless the ceiling was lifted.
Nigeria Airways is breathing a sigh of relief as the government has abolished its foreign exchange restrictions, making it possible for the carrier, the only international operator in the country to take fares in naira, to obtain hard currency more readily. The government has also announced it will entertain offers for a 10-year lease on the flag carrier. The abolition of the foreign exchange restrictions will also come as welcome news to foreign carriers serving Nigeria, some of which were threatening to suspend operations unless the ceiling was lifted.
Source: Airline Business
