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Nov 02, 2007

Air Malawi in talks with Comair on possible asset sale

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Water|Rail|Water|Operations
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The government of Malawi is in talks with South African airline Comair, which is interested in buying some of the assets of Air Malawi, the Southern African country's national flag carrier.

Malawi Privatisation Commission CEO Jimmy Lipunga says Comair has submitted a formal proposal to the Malawi government to launch a new airline called Comair Malawi.

"We are engaged in talks with Comair on Air Malawi. Comair is interested in acquiring air traffic lights from Air Malawi as well as some of the assets," says Lipunga.

He says the assets which Comair is interested in include a Boeing 737-300 aircraft.

If the negotiations come to fruition, Air Malawi will continue operating normally while the government seeks a buyer for the rest of its assets.

The Malawi government is pursuing a passive privatisation pro-cess for Air Malawi, following its failure to strike a deal with a preferred bidder when it advertised the sale of the airline in 2003.

Lipunga says the South African firm plans to roll out its operations in Malawi by December 1 but "this will depend on the progress of the ongoing talks".

He reports that Comair, which was among the firms that expressed an interest in taking over the airline when its sale was advertised in 2003, has since engaged a consultant "to determine some of the issues surrounding the deal".

If the deal goes through, Comair is expected to have an 80% shareholding in Comair Malawi, with the Malawi government owning the remaining shareholding.

The privatisation of Air Malawi will also involve the sale of the company's subsidiaries, such as Lilongwe Handling Company and Airport Development, which are responsible for airport operations.

Lipunga says studies have recommended that these subsidiaries be privatised as separate entities.

A civil society organisation called the Centre for Human Rights and Rehabilitation (CHRR) has, however, advised the government not to sell the airline in order to safeguard national interests.

"As Air Malawi planes fly across the world, they market the coun- try. The airline is, therefore, crucial to the country's efforts to promote its tourism industry abroad," says CHRR executive director Undule Mwakasungula.

Mwakasungula is also concerned that privatising the airline would render most of its employees redundant, as has been the case with other privatised enterprises, such as the national rail operator, Malawi Railways, and textiles giant David Whitehead & Sons.

Over 60 State-owned enterprises have been privatised in Malawi since the onset of the process in 1996.

Besides Air Malawi, the government is currently pursuing the privatisation of the country's biggest parastatal, the Agricultural Development and Marketing Corporation (Admarc), the Electricity Supply Corporation of Malawi, and the Blantyre and Lilongwe water boards.

World Bank-financed consultants have recommended that Admarc be split into two entities: a commercial firm and a government-funded trust to take over the social functions of the grain marketer.

Edited by: Martin Zhuwakinyu
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