Mozambique airlines suspends aircraft purchases

An LAM Embraer E190 An LAM Embraer E190

Mozambique’s flagship airline Linhas Aéreas de Moçambique (LAM) has decided to suspend the purchase of new Boeing aircraft to add to its fleet and open new routes because of its financial woes, the state company’s chief executive said on Monday in Maputo.

On the sidelines of the 21st Consultative Council of State Stakeholding Management Institute (Igepe), which took place in Maputo, Antonio Pinto de Abreu said the decision was simply due to the fact that the company is unable to pay for the new aircraft.

The first plane of a lot of three is due to arrive in Mozambique in November and the other two in the following two years (2017/18), under a plan intended to expand the airline’s presence in the main destinations in the region.

The president of LAM, quoted by Mozambican news agency AIM also said the company has a liability of US$139 million, less than the US$160 million in debt the board found when it took office six months ago.

Despite the decrease in liabilities, Abreu noted that the financial health of LAM is not good, with the annual report and accounts for 2015 showing a deficit.

The deficit is related to diversification of the fleet’s brands, which adds to costs due to the need for a variety of spare parts and technical capacity to solve operational problems at the country’s main airports.

LAM’s fleet currently consists of Boeing (B737-500), Embraer (E190) and Bombardier (Q400) aircraft and the company is considering reducing the diversity of the fleet in order to reduce costs.

Source: macauhub