The Mozambican government appointed international aviation consultancy Knighthood Global to “stabilise and reposition” the country’s flagship carrier within the next three months, reports the Portuguese news agency Lusa.
The Abu Dhabi-based consultancy has a difficult task ahead of it: LAM (Linhas Aéreas de Moçambique) has been plagued by problems for years, including high turnover of senior management, route suspensions and aircraft unavailability. Knighthood Global foresees a “transformation” of LAM and aligning the company “around a single strategy” to solve the airline’s problems, according to a statement from the company. “Moreover, the right connectivity will support tourism in Mozambique and, primarily, support the development and growth of other important sectors, including mining, oil, and agriculture.”
A statement from LAM confirms that the consultancy “will have the responsibility to advise on the restructuring of LAM’s financial base, provide strategic support in the evaluation, selection, and supply of aircraft suitable for operational needs,” among other duties.
Concurrently, the government will carry out a forensic audit on the company’s accounts covering the last decade, a process that is expected to conclude this year. A government source told 360 Mozambique that, as a result, it will be necessary to “reduce the number of employees” at LAM, which number around 800.
South African firm Fly Modern Ark (FMA), contracted by the government for the initial attempt to restructure, stated that it was willing to cooperate with the audit, alleging that problems at LAM are due to “internal networks responsible for theft and mismanagement.”
[See more: Mozambique’s flag carrier LAM slashes loss-making international flights]
President Daniel Chapo echoed this in his remarks in late April, telling press that there were “foxes and corrupt individuals” within the airline that had derailed previous restructuring efforts, including the acquisition of new aircraft, due to “conflicts of interest.”
An extraordinary general assembly of LAM in mid-May called for the removal of LAM’s administration, as well as the appointment of a non-executive board and a management commission to be chaired by Dane Kondic, former CEO of Air Serbia and former chairman of the Portuguese euroAtlantic board of directors. His commission will be “subordinated to the non-executive board of directors, with executive functions, tasked with managing the company and ensuring the continuity of operations.”
The newly established non-executive board will meanwhile be comprised of representatives from the three public companies that became LAM shareholders earlier this year – Hidroelétrica de Cahora Bassa, Portos e Caminhos de Ferro de Moçambique, and Empresa Moçambicana de Seguros.
A statement from Knighthood Global said it will work with the new shareholders, which “have a mandate to acquire the appropriate aircraft and reestablish a fleet.” Obsolescence of part of the fleet is one of the stated aims of the intervention, according to a statement from LAM, which also listed recurring financial difficulties and increasing competition in the aviation sector as structural challenges facing the flagship carrier.
Knighthood Global is well-positioned to address these issues, as seen in its transformation of Maltese national carrier Air Malta, one of its highest profile airline turnarounds. The consultancy is also committed to Africa, joining the African Airlines Association (AFRAA) as a full partner earlier this year and taking on similar revitalisation projects for the national carriers of neighbouring Zimbabwe and Tanzania.
