Three airlines have emerged as bidders for a stake in LAM Mozambique Airlines, with a decision due by October.

In total five consortia, including three led by TAP Air Portugal, South African Airways, and Air Mauritius, have pre-qualified to bid for a 51 per cent stake in the state-owned carrier, according to Estezao Uamusse, president of CEP, the government's privatisation commission. But the airline-led consortia have a clear lead over the other two, led by consultants, as the government is looking for a strategic airline investor. 'The most important thing for the consortia is that they include an airline,' says Uamusse.

Under the terms of the tender each consortium must comprise a foreign investor, to take a 20-30 per cent stake, and a national investor partner, who will hold the remaining 21 per cent.

Air Mauritius' interest has been sparked by growing economic ties between Mauritius and Mozambique and LAM's 'commercially quite viable routes', states Vijay Poonoosamy, Air Mauritius' director legal and international affairs. He says flights from Mauritius could be routed via Mozambique on their way to Europe. Bonifacio Dias, consultant at Ernst & Young, advisers in LAM's privatisation, says the winning candidate will be selected by October. Final bids must be in by 28 August.

The privatisation aims to raise US$22 million, which will be pumped back into cash-strapped LAM. In 1996 the airline's net profit plummeted by 85 per cent to US$790,000 on revenues of $44.7 million. LAM's debts include $52.4 million in outstanding payments on its Boeing 767-200ER, and another $2.5 million to financial institutions.

Lois Jones

Source: Airline Business