6 October 2006

Namibia: Air Namibia Bailouts Now Reaching Dramatic Proportions


AFTER a series of annual bailouts which cumulatively add up to well over N$1 billion since the 2001-2002 financial year, Cabinet has decided to grant yet another bank guarantee - this time for N$240 million - to Namibia's beleaguered national airline to get it through the current financial year.

And on the heels of this comes yet another 'turnaround strategy' which involves an expert consultancy funded by the European Union; as well as an audit to be conducted by Namibia's Auditor General of the operations of the airline.

This is a subject on which this newspaper has pronounced itself time and again, as one 'turnaround' after another, under a series of different airline CEOs, failed dismally to change the status quo with regard to Namibia's flagship national carrier.

Each time the result is the same: another Government bailout.

Perhaps this time it should be make or break one way or the other after the airline experts conduct their study and propose options for the future of Air Namibia.

But Cabinet needs to make such a decision once and for all.

If they do not, they risk wasting more time, money and resources than has already been the case.

This week Information and Broadcasting Minister Netumbo Nandi-Ndaitwah announced a N$240 million bank guarantee to enable the carrier to "secure funding from financial institutions for the remaining part of the (financial) year".

She added that the Office of the Auditor General had been instructed to perform an audit of Air Namibia's operations "in order to determine the efficiency of expenditures at Air Namibia and identify areas where costs could be saved and verify financial requirements for the company up to March 2007".

Fuel price hikes and competition with other airlines formed part of Ndaitwah's rationale for Government's guarantee for Air Namibia.

However, even though many critics of the endless Government expenditures on the ailing airline will again bemoan the N$240 million bailout, one can only hope that the decision to take up the EU's consultancy offer to plan a way forward will yield some positive results.

It is, however, vitally important that given the high cost of the consultancy itself, the Government takes the recommendations which flow from the probe seriously, and implement them at all costs.

The plan is for the consultants to conduct the in-depth study of the airline for some two months, after which they will present the Namibian Cabinet with various strategic options for a way forward for the national carrier.

Government should therefore commit itself to action once the abovementioned probe has been completed.

If not, the Air Namibia saga is bound to continue in its present form for the foreseeable future.

This will mean an endless drain on the country's precious financial resources, which could, and most certainly should, be more gainfully deployed elsewhere in the economy.

Now is the time to make Air Namibia profitable - for once and for all.

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