THE Malawi government, the only shareholder in Air Malawi, has admitted that the financial situation at the national flag carrier is not sustainable following another loss registered by the company in 2011.

The Malawi government's annual economic report for 2012, released in Parliament as part of the 2012/2013 national budget documentation, has revealed that Air Malawi has once more posted a loss of K1.1 billion following another loss of K1.3 billion registered in 2010.

Capital Hill has since indicated that it was taking a critical look at Air Malawi to find ways of salvaging the situation at the airline.

"Government is reviewing restructuring options for the airline. The objective is to halt the downward trend in overall performance of the airline," reads the report compiled by the Ministry of Economic Planning and Development.

The report says the airline operated below capacity due to financial challenges.

"Most of its equipment has not been operational during the year under review forcing the airline to lease aircrafts for its operations," reads the report, adding: "This has proved to be an expensive way of operating. Passenger levels reduced substantially during the year."

Air Malawi has since warned that it will continue incurring more losses due to the recent devaluation of the kwacha and lack of shareholder support for the airline.

"With devaluation, our traffic has gone down as less and less people are able to travel," said Air Malawi's Director of Marketing Tony Chimpukuso Wednesday.

"And we are still waiting for the new government to state their position on Air Malawi. The previous government was not interested in us. They just wanted us to close down," h e said.

Chimpukuso said lack of equipment, costs incurred to put passengers on other airlines during breakdowns and last year's 10 percent devaluation of the kwacha contributed significantly to the losses at the airline.

The Malawi Institution of Engineers (MIE) recently called on government to make a concrete stand on Air Malawi if the country's air transport sector is to be revamped.

In its contribution to the 2012/13 national budget, MIE asked for swift government's action on Air Malawi.

"Government should quickly resolve to take a decisive position on the matter and proceed to implement the solution with the speed required by the problem.

"This approach will bring in the much needed confidence against safety concerns and should contribute enormously towards the development of the tourism industry, in addition to all the other economic benefits that come with efficient and effective air transport services," said MIE President Matthews Mtumbuka.