Airline stake sale on hold—PPPC

Hold on! This is the message from the Public Private Partnership Commission (PPPC) to individuals and companies wishing to buy 31 percent stake owned by Malawi government in the Malawian Airlines Limited.

PPPC chief executive officer Jimmy Lipunga said in an interview last week government, which owns 51 percent stake in the airline, still has more time before it can offload some of its shares to local private investors as the company is yet to sustain its profitability since it kick-started its operations in 2014.

In Malawian Airlines, government owns a 51 percent stake with the remaining 49 percent held by Ethiopian Airlines (ET), which is a strategic partner.

When Air Malawi Limited was privatised, government committed to offload 31 percent to the private sector 12 months after the launch of the airline, subject to the company making sustainable profits.

Government was supposed to remain with 20 percent.

Lipunga said until the business outlook becomes stable, Malawians will have to wait before they are brought into the airline business.

He said usually at the beginning, everybody works on the assumption that within a year or two, the airline will be profitable, but the picture on the ground becomes different once the airline rolls out.

“Airline business is fairly complex and it is a high fixed cost operation and being a new airline coming from a not-so-well background, the airline had a huge task to retain market control against major international competitors.

“We would only free the shares if we are satisfied that business is stable. We don’t want to excite people to buy shares and in the end let them wait years before they can get a return on their investment,” said Lipunga.

He said in early stages of an airline business, there is usually a huge financial commitment, adding that if Malawians come into the business now and there is a requirement that the shareholders need to pump in money to the airline, they would feel betrayed.

However, Lipunga is upbeat that the company has taken off on a good note, expressing optimism that the airline will sustain the process.

As part of the airline’s expansion drive, the company will from end March this year start flying to Nairobi and Zanzibar, a development which will see it flying into the two destinations four times a week.

Speaking separately on Thursday, Ministry of Transport and Public Works spokesperson James Chakwera said it could take a little while before the airline offloads the shares, but was quick to say the airline is taking a right path to grow its business.

“We have noted that the airline is better now than when it started. Recently, they introduced flights to other routes in Africa which is an indication that they are taking the right direction towards growth.

ET made an initial investment of $20 million (about K14.6 billion) with Malawi government investment $10.2 million (about K7 billion) and the remainder was to be paid at a later stage. n