Joint venture between Malawian and Ethiopian Airlines not beneficial- Malawian Government

A senior Malawian government official has criticized the deal in which that country’s government entered into a joint venture with Ethiopian Airlines to operate Malawian Airlines. VIA- Lusaka times

And some Malawian Members of Parliament have continued questioning the relevance of the joint venture deal between the country’s national flag carrier and Ethiopian Airlines.

Zambia has become the second country in the SADC region to partner with Ethiopian Airlines, the first being Malawi in which the Malawian government holds a 51% stake with Ethiopian controlling a 49% stake.

Read Ethiopian Airlines to sign a joint venture airline with Zambia soon

The Head of Malawi’s Public-Private Partnership Commission (PPPC), Jimmy Lipunga, told The Nation Newspaper recently that despite the initial promise on its launch four years ago, Malawian Airlines had yet to reach breakeven.

“The business model that was floated during the tender indicated that the airline would be making profits by the second year, but the reality on the ground has been different as the airline has struggled to gain the market share that is needed to make profits,” he said.
Under the PPPC’s original plan, the Malawian government would have offered up a 20% stake in the carrier to Malawian citizens once it turned profitable.

That way, effective ownership of the airline would have remained in Malawian hands despite government’s retreat.
Malawian Airlines currently operates one B737-700 and one Q400 on scheduled flights to seven destinations in Malawi, Zimbabwe, South Africa, Mozambique, Tanzania, and Kenya.

And some Malawian Members of Parliament have continued questioning the relevance of the joint venture deal between the country’s national flag carrier and Ethiopian Airlines.

The MPs say the deal does not benefit Malawi adding that Malawian Airlines has not seen an improvement in its services since the deal was inked.

Member of Parliament for Nkhata Bay Central Ralph Mhone recently questioned the partnership between Malawian Airlines and Ethiopian Airlines describing it as not beneficial to Malawians.

Speaking during question time when legislators get responses from government through questions to Ministers, Mhone said that there are little or no benefits for government in a number of Public-Private Partnership (PPP) that it signs.

He said it is very important that when government signs Public Private Partnership agreements particularly those that have international implications, the country should believe to honour those agreements.

“The government has been signing a lot of Memoranda of Understanding under PPP but it seems it is not getting any benefits.

“For instance, we have the Malawi-Ethiopian Airlines partnership which has been in operation for some time. Surprisingly, we have never been informed about the dividends we are getting from the deal,” Mhone said.

Mhone, a lawyer by profession, said the country should be honouring its own law because “the aim of that particular law is that we must foster investment into this country.”

And outspoken Malawi Congress Party (MCP) Dedza East member of parliament Juliana Lunguzi has argued that there should be a review of the joint venture of Malawi government and Ethiopian Airlines on Malawian Airlines, saying it is not benefiting the country.

Ms. Lunguzi said in Parliament in her contribution the President Peter Mutharika’s State of the Nation Address (Sona).

She asked government to submit a report outlining the benefits of the country.

“We need a report from the Minister of Transport and Public Works on how much this country has benefitted from Malawian Airlines,” said Ms. Lunguzi.

“We need this report because some of us have received reports that the deal is not benefitting Malawi. Now, if Malawi is not benefitting, why do we still need it?”

Under the terms of the agreement, Ethiopian Airlines hold a 49 per cent shareholding in the start-up carrier with the remaining 51 per cent equity in the hands of the Malawian Government and Malawian private investors.

Through this strategic partnership, Ethiopian and Malawian Airlines offer harmonised flight schedules so as to provide seamless and best connectivity options for travelers within, to and from the Southern Africa region.

Last week, Zambia’s Transport and Communications Brian Mushimba announced that government expects Zambia Airways to commence operations in time for the country’s 54th Independence Day celebrations due on October 24, 2018.

The carrier will be a joint-venture with Ethiopian Airlines and will be allocated USD30 million from the 2018 national budget for its first year of operations.

Earlier this year, Ethiopian Airlines’ CEO Tewolde Gebremariam said Zambia Airways would likely operate a combination of Dash 8-400 and B737 NextGen equipment.

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