Exchange rate blamed for airport losses – Mozambique

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Exchange rate blamed for airport losses – Mozambique

9:16 CAT | 03 Jun 2016

The chairperson of Mozambique’s publicly owned airports company, ADM, Emmanuel Chaves, on Wednesday blamed the depreciation of the Mozambican currency, the metical, for much of the losses suffered by the company last year.

Speaking at a National Meeting on the balance of ADM’s activities in 2015, and its prospects for 2016, Chaves said “since this is a company that works with foreign airlines, it is very sensitive to exchange rate variations. Last year, we managed to achieve an operational profit, but because of the exchange rate differences, we had losses. These are the results, not of management performance, but of the economic conjuncture”.

“The exchange losses are not because we lost money”, he explained. “It’s an accounting loss, and this accounting loss is large because of our transactions”. The company’s debt service, for example, is denominated in US dollars, and the equivalent in meticais had changed enormously between the beginning and the end of the year .

Cited by the independent television station STV, Chaves said a second problem was a reduction in the income of some airports, because of a downturn in hydrocarbon activities. With the reduction in coal and gas activities in 2015 fewer passengers used Tete and Pemba airports than had been the case in 2014.

But this slowdown was a passenger reduction of only two per cent in Tete and Pemba. In Maputo, passenger numbers rose by five per cent over the year, and for the first time Maputo International Airport handled over a million passengers.

As for Tuesday’s government announcement that Nacala airport, in the north of the country, will be privatized, Chaves was optimistic that this would lead to greater competitiveness and investment in the sector.

But the main problem with Nacala is that it is an international airport with no international flights. The only airline using Nacala is Mozambique Airlines (LAM), with flights to Maputo, but to no other Mozambican city. No foreign air companies have expressed an interest in flying to Nacala, and it is hard to see why privatization would change this.

Chaves added that other airports will also be leased to private management – namely Inhambane, Ponta de Ouro and Bilene, in the south, and Mocimboa da Praia and Lumbo in the north. These are all small aerodromes, mostly used by tourists.

The privatization decision, Chaves said, “is to guarantee investment by private businesses, because our company has a history of indebtedness, and it must now manage what it has already invested. In this way, we are guaranteeing that the airport market will be more competitive”.

ADM is heavily indebted because, over the past seven years it invested about 500 million dollars in modernizing the country’s airports – particularly Maputo, Pemba, Nampula, Vilankulo and Nacala. Chaves said ADM wants to restructure its debt, and claimed this could be done without any extra costs for the government or the public finances.

The investment had been worthwhile, he argued, and this could be seen by the increasing number of foreign companies flying to Mozambican airports (for example, the latest companies to add Maputo to their list of destinations are Air Mauritius and Turkish Airlines).

As for the cost, Chaves said the new international airport in the South African city of Durban had cost 700 million dollars – more than ADM had spent on all its airports put together.

Deputy Transport Minister Manuela Rebelo told the meeting that ADM’s debt servicing is currently running at 21 million dollars a year. She believed that ADM needs to diversify its sources of income, and attract new domestic and foreign companies to use Mozambican airports.

The government, she said, believed that ADM was “a fundamental pillar for the development of air transport in Mozambique. The company needs to reposition itself so that it can face, with optimism and security, the challenges imposed by the current conjuncture”.

Source: AIM