Air Malawi: Government seeks strategic equity partner

The Malawi government has embarked on a new search for a strategic equity partner (SEP) for the national flag carrier, Air Malawi.

This comes after government failed to privatise the airline in 2003 and 2008 partly “because it was not attractive to prospective operators due to its huge debt”.

However, Privatisation Commission (PC) CEO Jimmy Lipunga says the Malawi government, has decided to honour the liabilities of the airline as it pushes to attract an SEP.

“An administrator is being engaged within the provisions of Malawi’s Companies Act to facilitate the settlement of the debts after a validation of assets and liabilities,” he says.

Air Malawi

Lipunga says he is optimistic that the airline will attract a suitable investor this time because of a change of approach and the fact that the aviation sector is booming.

He explains that the sale will not involve Air Malawi’s subsidiaries– Air Cargo and Lilongwe Handling Company– which will be privatised as separate entities.

“Air Malawi will be privatised through the recapitalisation method. This will entail Air Malawi issuing new shares to the SEP in consideration of new investment in fleet and working capital required by the airline.

“The SEP should be a consortium of investors comprising at least a reputable airline operator, financial investors and Malawian nationals.

“However, for purposes of safeguarding the bilateral air service agreements in relation to traffic rights, the shareholding attributable to Malawian nationals within the SEP– plus the remainder of government shareholding – should amount to at least 51%.”

Lipunga says interested parties should submit pertinent strategic information to demonstrate their strong financial and technical capability to recapitalise Air Malawi.

He states that the airline operator within the SEP should have a traceable record of credible and successful airline operations.

The roping in of an SEP for the airline is part of a drive by the Malawi government to develop the aviation sector, which is of critical importance, considering that Malawi is a landlocked country.

During the last three years, travellers to and from Malawi have experienced soaring air fares owing to a lack of competition primarily caused bya lack of capacity on the part of the national flag carrier to fully exploit its air traffic rights, a situation Lipunga hopes will be corrected with the coming in of a strategic investor.

The deadline for the submission of expressions of interest is October 5.

Air Malawi’s route network includes five regional and three domestic destinations from its twin hubs of Chileka Airport, in Malawi’s commercial centre, Blantyrem and Kamuzu International Airport, in Lilongwe, the capital city.

Regionally, it serves Johannesburg, Dar-es-Salaam, Nairobi Lusaka and Harare.

Lipunga says that, with substantial investment, Air Malawi could become a feeder airline to the major regional hubs of Johannesburg and Nairobi. There is also potential to introduce several new routes in the region and beyond, based on existing bilateral air services agreements.

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