State-owned Mozambique Airports reports inability to pay bank debt i- Carta

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State-owned Mozambique Airports reports inability to pay bank debt i- Carta

1:38 CAT | 08 Apr 2020

State-owned company Mozambique Airports (Aeroportos de Moçambique – ADM) says it has told banks that it will not be able to continue paying debts of around US$500 million, contracted since 2006 to modernise airport infrastructure. ADM’s Financial Administrator Saide Júnior says losses caused by the new coronavirus epidemic are preventing the company honouring its commitments to creditors.

In an interview on public television channel TVM a few days ago, Júnior explained that, due to the cancellation of dozens of international flights, largely by foreign companies, and the consequent drastic decrease in the demand for air transport, the company has been losing US$2 million in revenue per month (as of last February). By the end of March, passenger numbers had fallen from 172,000 to 88,000 passengers.

Júnior also said that, if the Covid-19 crisis caused continued for nine months (the most pessimistic scenario), the company’s losses would reach US$3.2 million per month.

Faced with this uncertainty, Júnior said that ADM had already informed creditors that it would not be able to continue paying its debt under the terms previously provided. “We have already sent a letter to the banks, informing them that we will face difficulties in honouring the commitments that we have in financial terms,” he said.

If the crisis worsens, ADM may not be able to continue to pay its 800 workers’ salaries. In relation to this matter, Júnior added that the company has requested the support of its banks so that it could assure salary payments.

Likewise, “We have written to the banks, asking them to support us should these problems spread to the point where we have problems paying wages and maintaining the operation at a modern level of quality and safety,” the ADM spokesman said. But the priority, Júnior said, was securing creditors’ understanding on a debt restructuring package, so as to be able to resume payments as soon as the crisis was over.

The Ministry of Health (MISAU) this Tuesday (April 7) indicated that the country had not registered any new cases of Covid -19 infection for a week, and still had just the previous 10 confirmed cases (one already recovered). MISAU had conducted a total of 424 tests, and 7,600 passengers arriving from elsewhere were confined to home quarantine.

By Evaristo Chilingue

Source: Carta de Moçambique