Maputo, Sept. 2, 2025 (Lusa) - State-owned airline Linhas Aéreas de Moçambique (LAM) will pay its debt in annual instalments, which will also be guaranteed by the state with commercial banks, according to the resolution authorising the operation, which the government approved on Tuesday.
A statement issued by the cabinet said that the government had approved "the resolution authorising the payment of annual instalments of LAM's debt, guaranteed by the state with the commercial banks", although the amounts involved were not disclosed.
To this end, the government authorised in the same resolution the Institute for the Management of State Holdings (Igepe), the entity that manages and coordinates the state business sector, to set up a vehicle with the specific purpose of managing and settling this debt.
Also approved was the resolution authorising the setting up of a special purpose vehicle owned by the companies Hidroelétrica de Cahora Bassa (HCB), Porto e Caminhos de Ferro de Moçambique (CFM), Empresa Moçambicana de Seguros (Emose) and LAM shareholders, "whose main objective is to ensure financing for the acquisition of the stake" in the airline.
On 28 April, the President of Mozambique, Daniel Chapo, said that there are "foxes and corrupt people" within LAM, with "conflicts of interest" that have prevented the company from restructuring in its first 100 days of governance, including the goal of acquiring three aircraft in that period.
The crisis led the company to virtually halt international flights this year, focusing on domestic routes, and also resulted in a new administration in May and the entry of HCB, CFM, and Emose as shareholders.
To minimise the recurring problems with flight cancellations, the company intends to acquire five Boeing 737-700 aircraft and, pending this process, has launched a tender to lease another five.
LAM's losses have soared to 3,977 million meticais (€53.5 million) in 2023, forcing the state to inject 1 billion meticais (€13.7 million) and issue a comfort letter in 2024, as Lusa reported on 7 August.
LAM, which has not made its accounts public, recorded losses of 448.6 million meticais (€6 million) in 2022, which then increased the following year, according to the most recent financial statements available to Lusa.
The company has been facing operational problems for several years, related to a reduced fleet and a lack of investment. A record of some non-fatal incidents has been associated with poor aircraft maintenance by experts, and the company is currently undergoing a major restructuring process.
Despite the losses accumulated that year, when the state-owned company was under the management of South Africa's Fly Modern Ark (FMA), the sale of LAM's services even grew by 4% in 2023, compared to the previous year, to 8,813 million meticais (€118.7 million), according to the report.
The document states that LAM "obtained a commitment" from the majority shareholder "to grant the necessary resources" to allow the company to "fulfil its obligations and commitments" to third parties, "by means of a comfort letter dated 7 October 2024", issued by Igepe.
It adds that, at the time, “given the losses made” in the financial year “2023 and in previous years” and because the company had closed its accounts for that year with negative equity of 19.670 billion meticais (€265 million), compared to 16.765 billion meticais (€225.8 million) in 2022, and that current assets “were lower than current liabilities” of approximately 18.641 billion meticais (€251 million), the carrier's continuity was in question.
"Aware of this situation, the board of directors appealed, through various presentations made to shareholders about the company's situation, as well as proposing measures, some of a short-term nature and others strategic, to maintain the company's sustainability," the report reads, adding that in 2023 the state "made accumulated supplementary payments totalling 1,017,393,669 meticais (€13.7 million)".
PME/ADB // ADB.
Lusa
