Ethiopian invests $20m in Malawi Airlines

July 4, 2013 • National News • Written by :

Air Malawi Boeing 737 500

Air Malawi Boeing 737 500

Ethiopian Airlines Limited, a strategic equity partner in the national flag carrier with 49 percent stake, has invested $20 million (K6.9 billion) and requested change of name to Malawian Airlines Limited, which has been granted.

Government, which has approved the negotiated deal awaiting signing by the two parties, will invest about $10.2 million (K3.5 billion) to be disbursed in two tranches, the first being $4 million (K1.3 billion) and the rest at a later stage, according to Jimmy Lipunga, chief executive officer of Public Private Partnership Commission (PPPC), a government agency facilitating the deal.

The Malawi Government has 20 percent shareholding with the remaining 31 percent to be taken up by Malawian individuals or institutions in the next 12 months.

Initially, when the process of identifying a new partner to recapitalise the new airline was started, a new investment vehicle to facilitate the entry of strategic equity partner called Air Malawi (2012) Limited was formed.

But Lipunga told journalists in Blantyre on Thursday that the Air Malawi brand has been seriously damaged due to erratic services and bad reputation accumulated through frequent flight cancellations and bankruptcy.

“There is an additional concern that using the name Air Malawi could expose the new airline to predatory creditors who would wish to create embarrassment on the new airline,” he said.

Air Malawi debts, which peaked at as high as K10 billion (about $25m), have not been fully settled, according to Lipunga.

The new airline, according to Transport and Public Infrastructure Minister Mohammed Sidik Mia, was supposed to have started operations on July 1 [Monday this week], but due to “complexity of operations and other issues” Cabinet delayed to approve the deal and Lipunga could not say when operations will start.

The strategic partner is bringing two aircrafts, Boeing 737 300 with 130 seats and Bombardier Q400 with 78 seats and will initially operate regional flights to Johannesburg, Harare, Lusaka, Dar es Salaam and Luanda. Domestic flights will be Lilongwe, Blantyre, Mzuzu and Karonga.

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