Mozambique: Boeing seeks $4.5M from LAM for alleged late parts supply payment

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Mozambique: Boeing seeks $4.5M from LAM for alleged late parts supply payment

8:18 CAT | 11 Jan 2024

FILE - For illustration purposes only. [File photo: AIM]

Boeing is demanding US$4.5 million from Mozambique’s flag carrier LAM for alleged late payments on a parts supply contract, but the state-owned airline only recognises a debt of US$729,000, according to official documents.

At issue is an invoice, to which Lusa had access on Wednesday, sent to the airline on December 20, as part of the parts supply programme, which provides for the shipment of replacement equipment for Boeing aircraft during repair periods, signed in 2014, but for which, in recent years, LAM has made no payments.

However, the invoice specifically charges US$3,487,851 (€3,185,396) claiming that more than 30 items or parts sent to Mozambique, in a deal managed by Air France/KLM from Amsterdam, had not been returned or were returned late, without further details.

Of the US$4.5 million (€4.1 million) invoice, according to documentation to which Lusa had access, LAM recognises a debt of US$729,228 (€665,908) for contract rents, which are in arrears, and has already proposed a phased payment to Boeing, which the US manufacturer refused.

In another document consulted by Lusa, from January, Boeing states that all the items or equipment supplied had already been returned, but the matter has since reached the General Inspectorate of Mozambique’s ministry of transport and communications, which has held meetings with LAM’s management.

LAM refuses to recognise the debt of almost US$3.5 million claimed by Boeing, and a source at the company, which since April has been managed by South Africa’s Fly Modern Ark (FMA), explained that the alleged delays in returning the 30 items or equipment sent to Mozambique are the responsibility of the forwarding agents.

The company also says that in recent years there have been delays of several months in the customs clearance of parts received in Mozambique, a situation that was overcome at the end of 2023 with a special authorisation issued by the government to simplify the process.

Another company source explained to Lusa that the debt claimed by Boeing comes at a time when FMA, which is revitalising the company, intends to use a credit of US$23.5 million (€21.5 million) from LAM to the US manufacturer (advances made by LAM from 2014 to 2019 for the purchase of aircraft), to move forward with the purchase of a new aircraft for the Mozambican carrier, which is launching new routes and which in 2023 exceeded 600,000 passengers carried.

However, Boeing refuses to release this money until the debt is settled by LAM and has also denied using this credit to pay the part of the debt recognised.

This agreement for the supply of equipment by Boeing is customary for companies with a small fleet, as is the case with LAM, and allows the carrier to have access to 429 spare parts during material repairs, for a fee.

The executive director of the FMA company, Theunis Crous, said on 14 September that he had found “situations of corruption” at LAM, the supply of services above market value and others without contracts, holding the directors responsible.

“They ran the company the way they wanted,” said Crous at a meeting with journalists in Maputo.

The severe financial difficulties led the government to place the Mozambican flag carrier under the management of the FMA in April 2023.

LAM’s flight network covers 12 destinations on the domestic market and Johannesburg, Dar es Salaam, Harare, Lusaka and Cape Town on regional routes, operating more than 40 flights a day using one Boeing 737, three Bombardier Q400s, two Bombardier CRJ 900s and two Embraer 145s operated by subsidiary MEX – Mozambique Expresso.

In December the new destinations Cape Town (South Africa) and Lisbon were launched and LAM intends to double its fleet of aircraft to at least 22 by 2027.

Source: Lusa