CIP warns that selling 91% of LAM to profitable state-owned companies may worsen financial risks. LAM has recorded substantial losses and is highly dependent on state aid. Immediate structural reforms and stronger public-private partnerships are needed to address LAM’s deep financial issues.
The Centre for Public Integrity (CIP), a Mozambican anti-corruption NGO, has warned that the government’s move to sell 91% of Mozambique Airlines’ (LAM) shares to three state-owned companies could escalate an existing operational crisis. The companies involved in this acquisition are Hidroelectrica de Cahora Bassa, which manages the Cahora Bassa dam, Ports and Rail Company, and EMOSE, Mozambique’s largest insurance entity, all of which are consistently profitable.
CIP asserts that this sale will shift LAM’s financial burdens onto these profitable entities, potentially heightening fiscal risk for the state. LAM’s financial condition is dire, marked by consistent losses and a total net loss exceeding 324 million US dollars in 2021. Furthermore, LAM’s negative equity and considerable adjusted net debt suggest severe operational insolvency.
According to the CIP’s analysis, LAM is heavily reliant on state support, with the Fiscal Risks Report 2025 demonstrating high fiscal risk due to this dependency and potential state liabilities. As of Q3 2024, LAM’s growing debt has exceeded 7 billion meticais, further complicating its financial landscape.
The report also highlights that during LAM’s management by South African firm Fly Modern Ark, the airline’s debt stood at roughly 300 million dollars, necessitating urgent capital infusion for operational continuity. FMA’s departure remarks spotlight the need for this additional financial support and systemic improvements.
Hence, CIP emphasizes that LAM requires more than just financial aid; it necessitates profound administrative reform and enhanced transparency. Strengthening public-private partnerships with credible strategic investors is essential to reduce political interference and foster effective management practices for long-term sustainability.
The sale of LAM’s shares could significantly exacerbate Mozambique’s financial troubles by transferring liabilities to solvent state companies. With LAM’s alarming fiscal condition and continuous state reliance, structural reforms and strategic investments are urgently needed to ensure the airline’s sustainability. The situation reflects broader fiscal risks that necessitate careful management to mitigate potential fallout for the country’s economic stability.
Original Source: clubofmozambique.com
