Can LAM take off in a new direction?

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Can LAM take off in a new direction?

12:16 CAT | 25 Jul 2018

File photo: DW

The Mozambican Airlines General Assembly has appointed João Carlos Pó Jorge as new director, but one Mozambican analyst says LAM will have to “start from below scratch”, and blames the government for its poor management and financial problems.

The new general direction will be formed by directors in the areas of operations, technology, finance, commercial, human resources and information and supply systems. “I am convinced that [Jorge]’s choice was correct, but his performance will necessarily depend on the support he receives from the government,” civil aviation expert Alves Gomes said in an interview with DW Africa.

The appointment of the new management follows the dissolution of LAM’s Board of Directors earlier this month following serious financial problems, with the the company cancelling after suppliers withheld fuel over unpaid invoices.

These problems come on top of allegations that former Mozambican Transport Minister Paulo Zucula and LAM’s former president José Viegas took bribes in the purchase of aircraft from Brazilian manufacturer Embraer between 2008 and 2010 .

“The Mozambican government is responsible for all of this,” Alves Gomes says.

DW Africa: How do you assess the appointment of new management at LAM?

Alves Gomes: I think we have finally taken the correct step for the future of LAM. The person chosen to lead the board of directors not only has experience but has the capacity to reorganise LAM. Engineer João Jorge has in-depth knowledge of the company, but it will take some time before he can establish rigorous rules and management that require great discipline and rigour from a financial point of view.

DW Africa: What do expect from the formation of the new board of directors?

AG: The information I have is that the result of talks with engineer João Jorge was that he should have the freedom to choose his own board of directors. I hope so, because only this way you can ask the person who directs the council to take responsibility. It will be for him to indicate the people with whom he will work.

DW Africa: What will be the biggest challenges of the new direction of LAM?

AG: Firstly, the main shareholder of LAM, which is the government, through the State Holdings Management Institute (IGEPE), will have to inject the financial means to keep the company running. From the human resources point of view, LAM has technicians capable of keeping the company operating under the normal conditions required by civil aviation technical regulations. It will not be easy for engineer João Jorge, but I am convinced that this choice was correct, but his performance will depend on the support he receives from the government.

DW Africa: How should the Mozambican government position itself in the face of the new management?

AG: First, it must allow engineer João Jorge to exercise independent management and give him 100 percent support in terms of allowing him to do what he thinks is best for the company. He is a person who knows LAM and its problems inside out so, given a free hand, he will be able to get LAM back to work. But LAM is in a disastrous situation. It’s coffers are empty and, in practice, it will have to start from below zero, which is not easy.

DW Africa: How can LAM restructure its financial capacity?

AG: It will need an injection of capital. First, the state will have to take over LAM’s debts and not to throw this negative burden on the new administration. In truth, the responsibility for all this lies with the government. It was they who went around naming incompetent administrations, people who were not aware of the sector, to manage LAM.

An airline company is not an egg farming company, or anything like it. It is a company that demands great rigour. And the people who were there and those who went there as appointees completely destroyed what had already been done by engineer João Jorge himself. One must not forget that engineer João Jorge arrived in 2014 and, by 2016, the company was working well, with revenues. And, suddenly, a new board of directors was appointed, which put engineer João Jorge on the shelf. A bunch of incompetents.

DW Africa: Does LAM have the potential to become a profitable company?

AG: LAM should be a profitable enterprise, because it continues to have a monopoly on Mozambican airspace. With the prices it charges, it should not have reached the state it is in now, without the daily cash to operate.

Source: Deutsche Welle