Covid-19 threatens AirZim lease deals

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AIR Zimbabwe (AirZim)’s plans to lease its aircraft have been imperiled, as carriers all over the world are battling their own demons associated with the coronavirus pandemic.
This comes as African airlines are seen losing as much as $400 million this year and Zimbabwe’s tourism industry has taken a serious knock, with hotel groups such as African Sun and Cresta closing all their properties.
While AirZim spokesperson Firstme Vitori says plans to dry-lease the B777s are still proceeding, with “discussions and negotiations with potential lessees still ongoing,” Ethiopian Airlines, which was understood to be leading the pack in the lease negotiations, has become the latest airline to ask employees to take unpaid leave.
The east African country recently reported its first death from the novel coronavirus, forcing its national airline to contemplate terminating the contracts of temporary employees in a bid to reduce losses in the face of a global lockdown.

Permanent staff members are being asked to take all their annual leave and up to 90 days.
The carrier, which is Africa’s largest airline, has had to make tough decisions regarding the future of its 8 000 employees. As the airline comes under more pressure to cancel flights and prevent the spread of the virus, it is trying to minimise costs.
According to Quartz Africa, a letter was sent to employees last week saying “you are hereby granted 90 consecutive days of leave without pay which will be in effect from April 03, 2020 to July 2nd 2020 after you exhaust all accrued and prorated vacation days”.
The airline has yet to comment on whether it will be asking employees to take voluntary early retirement or long-term leave packages.
Ethiopian Airlines grew rapidly over recent years, investing in aircraft leases, terminal expansions and network changes. However, the airline’s fatal Boeing 737 MAX crash last year marked the start of a difficult period.
Similarly, major carriers all over the world have been downsizing.
The Lufthansa Group ― the flag carrier and largest German airline, which is the second largest airline in Europe ― has announced that it will retire six of its Airbus A380s with immediate effect, a move that has been directly attributed to the drop in travel demand.
It also comes as AirZim is hoping to channel cashflows from the prospective lease arrangements towards the acquisition of smaller aircraft to “re-establish strong domestic and regional services,” according to Grant Thornton, the airline’s administrators.
Meanwhile, the flag carrier says it will reduce staff “and a skeletal team will be in place to ensure ad hoc operations, airworthiness compliance, safety, security of aircraft and associated equipment”.
“Therefore, some of us will be on indefinite unpaid leave from 23 April 2020 until operations normalise,” management said in a staff notice.
The airline said the lockdown, which started on March 30, 2020, has grounded operations “as most of destinations are on lockdown”.
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