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Namibian Govt to Close Air Namibia

Namibian government officials, including public enterprise minister Leon Jooste, have traveled to the United Stated to negotiate Air Namibia’s exit from aircraft lease agreement.

The closure of the national airline could cost the government around N$2,5 billion.

Jooste, along with officials from the transport ministry and the attorney general’s office, will meet the US company tomorrow.

Two months ago, Finance Minister Calle Schettwein submitted a memorandum to the Cabinet committee suggesting the closure of the airline.

The memorandum included the negotiation of exit lease agreements and transfer of the airline to public enterprises ministry.

In the document are detailed outlines on why the airline should be shut down.

The document shows in one of the estimates options that Air Namibia would need N$3,5 billion to continue operating in its current form for three years.

Another plan includes a board-supported bailout plan, and would cost between N$2,5 billion and N$3,3 billion.

The third option is a new business plan that would need N$4,1 billion, while the fourth is the total closure of the airline, an option recommended by Schlettwein.

“This scenario assumes liquidation of Air Namibia. The government liability of approximately N$2,5 billion under the remaining government guarantee for the lease agreement of the A330s will stand,” the Cabinet document said.

“The scenario is financially the most predictable [N$2,5 billion worse case] and therefore the preferred option,” the document said.

The airline has been unprofitable and over the years, Cabinet members have been divided on whether it should continue operating as a public entity, get privatised, or close down.

The document shows figures of N$8,3 billion that the government pumped into Air Namibia from 1999 to 2019.

Schlettwein, in the memorandum, said the airline’s historic debt is N$1,3 billion.

He also indicated that Air Namibia might not operate beyond 12 months.

“The company has considered approaching the market for external financing and borrowing against assets. However, this option is not feasible, given the consistent message in the past that banks refuse to advance financing in the absence of audited financial statements, aircraft is an asset class which cannot be converted into cash, and due to low confidence in management capability, given the historic challenges,” he said.

Schlettwein said the airline’s financial governance has been poor over the past years.

He said although the costs involved in the liquidation process might be steep, he believes that grounding the airline will lead to significant savings in the long term.

“It is clear that Air Namibia under the current model is unsustainable, and that key decisions have to be taken urgently at shareholder level regarding the future of Air Namibia,” Schlettwein said.

According to Jooste, this mission is in line with directives from the Cabinet committee on overall policy and priorities and the Cabinet committee on treasury.

“The decision was taken for me to lead this delegation for this purpose,” he said.

“If we can’t terminate the lease agreements on acceptable terms, Air Namibia will take up the process to enter into the actual negotiations with the owners as that then becomes an operational matter, where the shareholder will not be directly involved in.”

According to Jooste, the outcome of the US talks will give a more accurate indication of what options are available, and at what cost as far as the troubled airline’s future is concerned.

 

23 Comments

  1. Uummmmhhh

    Come and get some zambians here who are qualified in selling and liquidating 🦍🦍🦍🦍🦍🦍

    • Anette Bennett

      We were in a situation where our flights with SAL were canceled 3times from Nam to SA and ONLY NamAir could assist us. When landing on OR Thambo in Jhb, there were 5 Nam aeroplanes on the basis! How can you explane this? They were hostile in lodging us into a hotel in Windhoek including transport when SAL were not available or even had tried to have a office open for customers. As an old Suidwester I would love Namibie to tackle this so much called after our beloved land to assist and behold this airline business for future investment. Please do not go the SA route. Your president said that Nam will show the rest of the world how to do the right thing.

  2. Logistician

    very sad for air Namibia especially employees anyway people are given wrong positions in transport sector that’s transport businesses are limping.

  3. nineo

    These people go so far away to US when they could just cross the boarder through Katima Mulilo to get advice from the PF Government who are on the cerge of setting up a National Airline (Zambia Airways re-born)? Or have they already learnt how to get allowances by creating unnecessary trips and decisions?

  4. Lilemba

    The airline has been limping all these years. Government of Namibia has been bailing out the airline without success. It is a sad story of mismanagement and naked corruption at its highest which grounded the airline.

  5. Mondjila

    It is very sad to see that the gap between where we stand now and economic independence keeps on increasing fairly rapidly.

    I forsee a foreign country owning the airlines in Namibia.

    • Julius

      Compromise freedom is what leading Namibia to poverty while we have everything in our country

  6. P.M

    Timely warning to PF government that airline industry is highly competitive and cqnnit be run by cadres

    • Me

      Yes, this the item to politicize, not funeral. @ P.M have you ever lost a beloved one? If so, how would you have felt if someone instead of mourning and emphasing with you, goes fyo,fyo,fyo? Learn to have manners you are old enough to reason.

  7. paskalia Iyambo

    It’s very sad, especially to the employees

  8. Chillo

    So many people will be on the streets…
    Chillo

  9. Richard Gariseb

    It’s sad but why is the parastatal not looking in the structure how and who they hire en if papers sbow competence is it true in physical creativity. Ceo’s and all administrators are responsible for whatever is happening at the airline.

  10. Kassala

    There is this rampant belief in African countries that foreign expertise will undermine internal security (or whatever that means). As a result they prefer incompetent locals to outsiders who are competent. Tepapa! Namibia DOES NOT tolerate foreigners at CEO levels preferring their own incompetents.

  11. Durscan

    Its not a surprise. Soon there will be no parastatals in Namibia. Shame

  12. Realist

    Zambian Government take note. We will go down the same path with the new Zambian Airways.

  13. JB

    Please find an option that will serve the Airline from completely shutdown.Why not privatise the Airline than GRN to keep on bailing the Airline eventime they are in financial difficults.

  14. J.U.Anguuo

    Street roaming increased again by those air Namibian employees

  15. Ndapanda

    Privatisation. But at a reasonable price as long consideration in all aspects are considered.

  16. KGK

    AirNam should be privatised coupling with qualified aviation management.
    Eliminate the non aviational members…

  17. Richard

    I feel that the airline can operate once the government stop changing the airline management. Keep one person with good administrative background to run the airline. If we don’t have such person source him or her from abroad. Air Namibia is countries bride. Open more airports in the country. To local people can may use of its services.

  18. Philip

    The USA does not have a National Airline. The American Airline is private. Why must we have a National Airline costing the poeple of Namibia billions. If we take those billions and invest it in our poeple, surely this will benefit us much more. For example how many houses can we built for the poor. How many farmers can we educate to build profitable farms exporting goos. I think hunders of thousands with a few billiin a year….

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