Mozambique: Three state-owned companies to inject US$130 million into LAM

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Mozambique: Three state-owned companies to inject US$130 million into LAM

4:36 CAT | 13 Nov 2025

File photo: Lusa

The Mozambican Minister of Transport said this Thursday that three state-owned companies will inject US$130 million to recapitalise LAM and that 80 workers are set to leave as part of the restructuring of the state-owned airline.

While briefing MPs in parliament on the restructuring process of Linhas Aéreas de Moçambique (LAM), owned by the State, João Matlombe revealed that the Government’s February decision to transfer 91% of the share capital to the state companies Hidroeléctrica de Cahora Bassa (HCB), Caminhos de Ferro de Moçambique (CFM) and Empresa Moçambicana de Seguros (EMOSE), foresees that the three will pay that amount.

The aim is “to recapitalise the company, restructure operations and acquire new aircraft. The new shareholders HCB, CFM, EMOSE and other public funds reinforce the strategic and national character of the company, maintaining state control and ensuring LAM’s direction serves the public interest,” explained the minister, revealing for the first time the amount of the transfer operation, set at US$130 million (111.8 million euros).

READ: Mozambique: LAM to lay off 80 employees

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The minister said that over the past ten years LAM “has faced persistent economic and financial difficulties,” mainly resulting from “high indebtedness with banks and suppliers,” in addition to “very high operating costs, namely with leasing, maintenance and fuel,” and due to “a workforce structure mismatched to the actual volume of operations.”

On the other hand, Matlombe added, LAM recorded negative operational results of 4.6 billion meticais (61.9 million euros) in 2020, reduced to 2.6 billion meticais (35 million euros) in 2023.

“Leasing, maintenance and fuel costs absorbed, on average, 84% of revenues, and total indebtedness exceeds 13 billion meticais (174.9 million euros), compromising the company’s liquidity. Given this situation, and after several attempts to recover the company’s critical situation, the Government decided to intervene with structural measures,” he pointed out.

READ: Mozambique: Civil aviation needs US$710M over the next 20 years

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Matlombe explained that the ongoing “restructuring” involves “valuation and rationalisation of human resources” and that, for this, “a workforce assessment [800 at the start of the process] was carried out, which identified an excess of staff.”

“Of these, 80 positions are already in the process of being terminated, with the remainder adjusted in phases, according to the implementation of measures such as: Closure of unnecessary stores, outsourcing of customer service and others, introduction of an integrated accounting system,” he explained, assuring that “all compensation” for departures “strictly follows Labour Law, ensuring payment of notice, severance, holidays, 13th month salary and an additional month’s compensation,” guaranteeing “transparency and dignity in this process.”

Also questioned by the opposition, Matlombe acknowledged that the fares charged by LAM, which focused only on domestic flights, “reflect a still high cost structure (…) conditioned by excess staff” and “high leasing costs” for aircraft, as well as “dependence on imported fuel [JET A-1].”

“The Government is rationalising costs, optimising routes and renewing the fleet, aiming to make fares progressively more affordable, without compromising the company’s sustainability,” said the minister, assuring that the “principle is clear”: “Citizens cannot pay for the company’s inefficiency.”

In responses to MPs, the minister said that “stabilising punctuality and customer loyalty” at LAM is underway, along with the implementation of a New Business Plan 2025-2030, “with clear performance and national coverage targets,” as well as “review and restructuring of the company’s holdings” in various companies, “including closure or exit from non-strategic participations.”

Source: Lusa