Linhas Aéreas de Moçambique (LAM) is mired in a financial crisis with the potential to drag down others in the state-owned business sector, one of which is Aeroportos de Moçambique (AdM).

Around 40% of AdM's revenues come from LAM, but the airline is currently adding up debts and not converting the contribution into effective liquidity. "In 2023, the amounts owed exceeded 4.8 billion meticais, of which 2.6 billion were considered irrecoverable," said the Center for Public Integrity (CIP), which analyzed the reports and accounts of LAM and AdM between 2018 and 2023.

The company has a level of debt that is twice the value of its assets. "As an example, in 2023, the total debt amounted to 6.7 billion meticais, while the value of the assets was only 3.3 billion meticais," illustrating the imbalance in LAM's finances.

"By the end of 2023, the company [AdM] had negative equity, estimated at 1.2 billion meticais, and accumulated losses of more than 18 billion meticais, constituting technical bankruptcy," he said.

In addition to LAM's crisis, AdM finds itself in free fall due to more investments in infrastructure such as Nacala International Airport - which registers, on average, operating losses of more than 632.2 million meticais per year - and Filipe Jacinto Nyusi Airport, whose accumulated operating losses for the years 2021 and 2022 exceeded 294.0 million meticais.

With more than 18 billion meticais in debt, around 9.6 billion meticais are related to the construction and maintenance of the Nacala International Airport, and more than 10.5 billion meticais of this debt benefit from state guarantees - Sovereign Guarantees and Letters of Comfort.

"Under these conditions, in the event of default, the Mozambican state could be called upon to honor these commitments, thus constituting a significant fiscal risk," warns CIP.

Faced with this scenario, the civil society organization advocates diversifying the sources of aviation revenue, which are currently excessively concentrated in LAM.