The Joyce Banda administration will find a strategic partner for Air Malawi, reversing the Bingu wa Mutharika administrationâ€™s decision to liquidate the national flag carrier.
In March 2011, the Mutharika administration decided to liquidate the airline and use taxpayers’ money to settle its current K5 billion (about $20 million) debt, accumulated over seven years.
That move would have left Malawi with no airline and resulted in the country relying on foreign carriers to service its international routes.
The decision could also have been a further drain on Malawi’s forex as the foreign operators would have been externalising even the forex that should otherwise have been generated and retained by Air Malawi.
Sources confided that at a recent meeting in Blantyre, the Banda administration decided that the liquidation would be expensive because apart from the debts, there would be payouts to retrenched staff and refunding of advance tickets.
In an interview last week, Transport and Public Works Minister Mohammad Sidik Mia confirmed that Cabinet discussed the matter but refused to comment on the decision reached.
â€œThe Cabinet has since formed a ministerial committee on the matter and its decision should be ready next week,â€ he said.
In a separate interview, Air Malawi chief executive officer Patrick Chilambe said he has been briefed on the current government stance.
â€œThat is the most viable option,â€ he said.
In another development, Chilambe confirmed the airline is likely to retrench non-core staff. Currently, Air Malawi has 250 employees. Experts propose a reduction to about 120.
Meanwhile, Ernest and Young consultants are restructuring the airline in all areas, including equipment, requisite staff skills and finances.
A brief on Air Malawi indicates that two of the current three crafts have been grounded for the past four years due to lack of funding.
Both planes require mandatory checks and engine overhaul.
Under the partnership option, government is likely to approach potential partners such as Jet International of South Africa, Comair, SAA Express, Kenya Airways and Ethiopian Airlines.
Most bilateral air services agreements stipulate that the shareholding of airlines designated by the State to provide air services should include at least 51 percent of the stakes owned by the State or nationals of that State for it to enjoy the obligations under the agreement.
The option has worked well with Kenya Airways which now has three shareholders: the Government of Kenya (30 percent), KLM/Air France (23 percent) and the public (Kenyans) owning 47 percent.
Air Malawi has functioned at below capacity due to financial challenges and operated with leased equipment which has proved expensive for the airline.