Air Malawi has pleaded that the strategic partner government wants to pair with to run the national flag carrier should not swallow it.
Early July this year, The Nation disclosed that the Joyce Banda administration would find a strategic partner for Air Malawi, reversing the Bingu wa Mutharika Cabinet decision to liquidate it.
In March 2011, the Mutharika Cabinet decided to liquidate the airline and use taxpayersâ€™ money to settle the airlineâ€™s current K5 billion (about $20 million) debt, accumulated over seven years.
That move would have left the Malawi with no airline and could have resulted in the country relying on foreign carriers to service its international routes.
The decision could also have been a further drain on Malawiâ€™s foreign exchange as the foreign operators would have been externalising even the forex that should otherwise have been generated and retained by Air Malawi.
And with no Malawi flag in the air, tourist attraction to the â€˜Warm Heart of Africaâ€™ could also have been hit.
But the Banda Cabinet decided that liquidation would be expensive because apart from the debts, there would be payouts to retrenched staff and refunding of advance tickets.
Under the partnership option, government may approach potential partners such as Jet International of South Africa, Comair, SAA Express, Kenya Airways and Ethiopian Airlines.
Speaking in an interview on Monday, Air Malawi spokesperson Tony Chimpukuso, who is also head of tarrifs and industry affairs, said the best partner for Air Malawi should be the one that will allow the national airline to continue using its name and help it widen its network.
“It happened in Kenya where KLM allowed Kenya Airways to continue using its brand name. The name Air Malawi is very special and it would not be good if a partner comes in and orders us to remove the name from our planes,” said Chimpukuso.
He said the company is currently undergoing restructuring in readiness for the partnership with the foreign company yet to be announced.
“The restructuring has been going on for three months and hopefully it will be over in two to three months. The consultants are exploring various ways that will make the airline viable once again before we go into partnership,” said Chimpukuso.
Principal Secretary in the Ministry of Transport and Public Infrastructure Moffat Chitimbe only said government is still in the process of looking for a partner to run the countryâ€™s airline.
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: Government of Kenya (30 percent), KLM/Air France (23 percent) and general public (Kenyans) who own 47 percent.
The option to find partners for Air Malawi is third in a series. In the past, Malawi has tried to sell the airline before opting for liquidation in 2011. Comair was among those interested to purchase Air Malawi.
If the decision to find a partner holds, the investor is expected to bring on the table financial and technical support while the governmentâ€™s equity will come in form of traffic rights that are provided under the existing Bilateral and Multilateral Air Agreements.
Capital Hill will also still have to shoulder the burden of paying off Air Malawiâ€™s debts.
While the advantage of this arrangement could mean that government will no longer have to fork out taxpayersâ€™ money to bail out Air Malawi in future, there are also disadvantages.
For example, it will be hard for Capital Hill to exercise control over the company.
In addition, whoever takes over the firm may choose to fly their own flag, not Malawiâ€™s, which could also affect the tourism ambassador role that Air Malawi came to be. This is one of the fears that Air Malawiâ€™s Chimpukuso is emphasising.