Mozambique: Government may pay €2.6 million in compensation to euroAtlantic Airways

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Mozambique: Government may pay €2.6 million in compensation to euroAtlantic Airways

2:00 CAT | 14 Apr 2025

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

The Mozambican government on Friday said that it could pay three million dollars to euroAtlantic for the termination of the contract with the state-owned Linhas Aéreas de Moçambique (LAM), an amount less than the compensation demanded by the Portuguese company.

“It basically has to do with a contract with euroAtlantic, which provided services on the Maputo-Lisbon route, and the government assessed the situation, as part of the restructuring [of LAM], and decided to terminate the contract. As part of the termination of the contract, obviously, the company that had a contract with the state, with LAM in this case, requested compensation of US$21 million,” said Minister of Transport and Logistics, João Matlombe.

In response to journalists’ questions, the minister confirmed that a team analysing the contract had reached “the conclusion” that the amount requested by euroAtlantic was “too exaggerated”.

“And the amount, more or less, now, of the advance notice, which is the obligation when terminating the contract, is of around three million dollars. Therefore, this is the amount we have on the table, but the teams continue to work,” Matlombe added. “There are still accounts to be settled” between the two companies, including invoices that “were paid” by LAM but where “the work was not carried out”.

EuroAtlantic Airways (EAA) announced on 27 February that it had terminated its contract with LAM with “immediate effect”, alleging the Mozambican carrier’s failure “to pay its substantial financial debts” and promising to take action.

“EAA remains committed to protecting its commercial interests and will take all necessary legal and commercial measures to ensure an orderly conclusion of the current contract,” reads the statement from the Portuguese company sent to Lusa at the time.

At issue is LAM’s connection between Maputo and Lisbon, which was operated by euroAtlantic aircraft, but was suspended on February 19 by the Mozambican state-owned airline.

“EAA, which began operating this route for LAM in December, 2023, was only informed of the sudden suspension of all services on this route on February 11, 2025,” the carrier noted.

Quoted in the document, euroAtlantic’s president, Stewart Higginson, stated that the Portuguese carrier trusts “that LAM will settle its outstanding financial obligations as soon as possible.”

“However, we naturally remain available to support LAM in the future as the situation evolves, and we hope to be able to strengthen the relationship that both parties have built over the past few years,” he added.

On February 18, LAM announced the suspension of the Maputo – Lisbon route starting the following day, stating that, since 2023, the company had accumulated losses of more than US$21 million (€18.5 million) from the operation.

“As long as the house is not in order and we continue to have irregularities on domestic flights, we cannot fly large,” declared Alfredo Cossa, LAM spokesperson, at a press conference in Maputo.

Abandoned by the company for almost 12 years, the Maputo – Lisbon route was resumed on November 20, 2023, as part of the operator’s revitalization plan, after the South African company Fly Modern Ark (FMA) took over LAM’s management in April of that same year for a restructuring process.

The transport was provided by a 302-seat Boeing 777, the result of a LAM partnership with the Portuguese operator EuroAtlantic, but according to the LAM spokesperson, the company’s new Board of Directors concluded that the operation was unviable.

“We were funding this route based on funds from the domestic market. We produced and paid, and now we can no longer cope,” added Alfredo Cossa.

In addition to the Maputo-Lisbon route, LAM also suspended the connection between the Mozambican capital and Harare, in Zimbabwe, and Lusaka, in Zambia, which were also described as unsustainable.

Source: Lusa / DN