Interview of the Chief Executive Officer

LAM–Mozambique Airlines, set up on 14 May 1980, this year celebrates its 35th birthday, with a growth horizon which includes the acquisition of three new aircraft, ordered from Boeing, and which will bedelivered as from 2016. At the same time, as from this year, LAM will strengthen its fleet with another two aircraft. The acquisitions are intended to give consistency to the expansion of the company’s network of flights which covers the opening of intercontinental destinations. These and other proposals included in the company’s Strategic Plan for 2014–2018 were themes of the following interview with the Chief Executive Officer of LAM, Dr. Iacumba Ali Aiuba.

Administrador Delegado LAM - Iacumba Aiuba

Text Norberto Mucopa photography Mauro Vombe

At the time when we are celebrating the company’s 35th anniversary, can you tell us how LAM sees the future?

In 2014 we began a new cycle in our Strategic Planning. In our Strategic Plan for the five year period from 2014 to 2018, the areas where we shall intervene are clearly and vigorously defined so that we can remain competitive. We are investing in new technology, both in equipment and in human capital. The aviation industry is capital intensive and with minimal margins of return, hence we must concentrate our attentions on obtaining revenue and controlling costs.
Bearing these challenges in mind, we can state that LAM regards the future very optimistically.

What are the lines of intervention of LAM on the market, considering the challenges and the growing demands? Can we also group by market segments – such as domestic, regional and intercontinental?

Expansion in the market is one of LAM’s fundamental goals. Taking this ambition into consideration, we believe that on the domestic market our intervention necessarily involves consolidating the operation with an increase in the frequency of flights to all destinations, and the opening of new routes. Thus we are marking our growth, which recently marked a significant stage with the start of flights to Nacala, where we shall have more news in the future. We intend to improve continually the quality of the service we pro- vide to our clients and at a competitive price. Obviously there are many challenges ahead of us. But we are confident of a very promising future.

In the regional service, our goal is that by 2018 we can be flying to most of the capital cities of SADC countries. We want to be an active part of the regional integration process.

In the intercontinental segment, we maintain our ambition to re-introduce flights to Lisbon and to start flying to Asia, the Middle East and South America.

The Mozambican economy is one of the fastest growing in Africa, and thus the country is a destination for investment opportunities, which in itself is a factor that encourages traffic. How does LAM feel the effects of the economic conjuncture, and what measures has it taken?

Studies held by various sources clearly show that in recent years the country has been a privileged destination for foreign investment which, at the same time, has led to a substantial growth in traffic. In order to respond fully to this demand, LAM has been working to position itself better in the market, through strengthening its response and transport capacity. As part of this strategy of building up the fleet, in 2016 we shall begin to receive the new Boeing 737 NG aircraft. We have ordered three of them. At the same time we shall add, as from this year, a further two aircraft with medium capacity of seats.
We are committed to raising the quality we provide our clients through introducing new technologies and good practices which the industry offers.

For the past few years, trends in aviation have been marked by an increasing move towards alliances. How does LAM regard this concept?

LAM is already working with possible partners, with the intention of joining one of the alliances. However, there is still a long way to go before we can achieve this dream. As you can imagine, an alliance is a club and to become a member there are certain criterias that must be observed. We can cite as examples, in terms of criteria ́s, the number of passengers that a company carries, the traffic distribution net- work and others. With the growth of the Mozambican economy, we are aware that we shall reach the required volumes, so that we can join an alliance.

The aviation industry has a dynamic of continual innovation and, from the records; LAM has undergone several phases of transformation. Right now, what are the pillars of your modernisation process?

The modernisation of LAM rests on four pillars, namely:Comfort (Standardisation of ground and inflight services, consolidation of the client loyalty programme, and introduction of Customer Relations Management); Credibility (increased safety and standardisation of services throughout the value chain, consolidating the ISO and IOSA certificates); Convenience (geographical coverage, offer of frequent flights with a timetable convenient for the passengers), and choice (placing on the aviation market in accordance with client expectations, introduction of electronic systems which facilitate the purchase of tickets, as well as sales in shops, and the introduction of on-board entertainment).

For these pillars to have a solid base of support, we are investing in new aircraft, and in improving our procedures, particularly in the development of human capital. We are aware that the new technologies we are introducing will only have the desired effect if the LAM workers are duly trained and if we bet on change.

With regard to training, 2015 is a crucial year for the use of SMS (Safety Management System). What are the stages that are being followed?

LAM regards safety as one of its top priorities. The SMS – Safety Management System – also known as the “operational safety management system”, seeks to ensure that all the workers form an active part in management procedures, knowing, identifying and reporting the various factors which impact upon our operation. It is a new approach to operational safety in the industry. It is mandatory, and its purpose is to allow the company to know the various dangers and adopt preventive measures to mitigate or eliminate them.

Given the importance and the compulsory nature of implementing SMS in the air companies which are members of IATA (International Air Transport Association), LAM decided to include this action in its current Strategic Plan. It began with the training of three internal trainers, who are currently providing the other workers with knowledge in this field. Coverage has already exceeded 60 per cent of the work force.

And with regard to specific areas such as pilots and technical staff?

One of the fundamental components to the logistics of incorporating new aircraft into the fleet concerns the training of the staff who will undertake the operations, such as the pilots and the cabin navigation staff, as well as the technicians who will carry out the regular maintenance. As for the crew, the start of the training of five captains who will shift from the Embraer 190 to the Boeing 737 is contemplated for the second half of this year. In this case we shall have a significant movement of existing crews in the company, and the recruitment of new pilots. We plan the training of two more captains to operate the Boeing 737- 500, five co-pilots who will shift from the Q400 to the Embraer 190, the hiring, from the national market, of four captains to operate the Q400 and the training of six co-pilots for this latter type of aircraft. As you can see, it’s a complex process. Even so, it is still our undertaking, as Mozambique’s flag company, to give priority to training Mozambicans. We have prioritised capturing talent, absorbing young Mozambicans who, on the initiative of their own families, have decided to take the piloting course. From this perspective we have encouraged the banks to contribute to the training, and there is now a body which grants specific loans for the training of pilots. In cases where we have greater demand but there is not much supply on the market, we bear the costs of training and we select the candidates from young people doing their compulsory military service, on the basis of a partnership with the Ministry of Defence. As for cabin navigation crew, we have established a training priority which began with a group of 30 professionals who will soon graduate, while the other course for 20 navigation crew will run until next year, so as to maintain the availability of commercial crew members and a minimum of operational safety, even with the inclusion of the new aircraft.

For the technical area, we plan to recruit 20 new professionals, for aircraft maintenance, aeronautical workshops, engineering and other maintenance support services. The perspective is to strengthen the existing staff table, and also guarantee the viability of the Succession Plan, in the framework of acquiring more aircraft. The foundation courses for recently recruited technical staff and engineers are safeguarded, as are other specific aircraft training, as well as On-The-Job-Training.

We are also taking measures for a qualitative improvement in the performance of the workers overall. Training activities are under way for the development of human capital, including the implementation of the Assessment Centre project (project to assess the skills of intermediate staff), and the Performance Assessment System.

What image do the managers, workers and shareholders hold out for LAM in the short, medium and long term?

LAM is, in the short term committed to a new revival. We want to make the new image of LAM coincide with the arrival of the new B737 NG aircraft, in 2016. To Conclude, we are paying greater attention to the training of our workers in rebranding the company, so that they can fully respond to the changes we are banking on introducing.

As for our services, we are making innovations, with the purpose of being closer to our clients.

What is LAM’s concept with regard to its passengers?

We want to transmit to our passengers a concept of safety, comfort and quality throughout the value chain. We are investing continually to maintain our safety and quality certificates. We want to be close to our clients at all times. So we are introducing innovations, which is a characteristic of the civil aviation industry. By the end of 2015, we shall introduce a new system of reservations and acceptance of passengers at the check-in. Today it is already possible to acquire tickets using electronic payment systems, thanks to the partnerships we are establishing with service providers.

We are aware that, with the introduction of the new fleet, as from 2016, we shall significantly improve the quality of the service we offer to our passengers, both in terms of the product and of our operation. We shall have more aircraft available, which will allow us to increase the frequency of flights to each destination as well as the possibility of exploiting new routes.

Can we have an idea of how LAM has grown over its 35 years?

During its 35 years of existence, LAM has grown both quantitatively and qualitatively. To speak of the 35 years of LAM, we have to look back over its growth. At all the historic moments in the life of our country, LAM has served as a link between Mozambicans. Obviously during these 35 years the company went through several moments that were the result of the economic conjuncture of the country.

With the liberalisation of the civil aviation market in Mozambique, other companies have entered the national market, which has stimulated LAM to innovate, in order to remain competitive.

If we recall, there used to be domestic destinations to which LAM flew once a week, and when the plane landed, that was the event of the week. LAM was carrying the passengers, the newspaper, the magazine, the post, etc. In those days LAM had a merely social function, and that responsibility will continue for many years, because the company is aware that it should be very close to the needs of Mozambicans.

In recent years, LAM has taken a qualitative leap and has been accompanying the growth of the national economy. It is obvious that we still have many challenges ahead of us.

Iacumba Ali Aiuba

Chief Executive Officer
LAM SA