15 January 2013

Namibia: Cut Costs or Crash Airnamibia Told

GOVERNMENT "may lose sympathy" for Air Namibia, should the national airline not scale down its operations to cut costs.

This was the unambiguous message from the minister of works and transport, Erkki Nghimtina, yesterday.

Nghimtina's warning comes amidst news that Air Namibia is unable to settle its fuel bill with Engen Namibia. "Are they not making enough money with their planes? Why can't they cut? If you are unable to do anything, you have to cut operations to be able to handle the situation - it's a matter of life."

Moreover, Nghimtina said, cutting costs when you struggle financially "is a model of business".

Asked whether Government would come to Air Namibia's rescue in the form of a bailout, he said: "Government may lose sympathy - not saying it will, but it may."

He said the airline's management needs to ensure that it generates "sufficient money" to sustain itself. "This only expanding, expanding, expanding is not fair. You chew what you can chew. You cannot expand like you are America with money."

It is important to bear in mind that Namibia has a small population, with a small number of people being able to afford air travel, he said.

The Ministry of Works and Transport has had to fork out more than N$300 million under his leadership to keep Air Namibia afloat, Nghimtina said.

When asked whether allegations are true that he does not support Air Namibia's managing director Theo Namases, he said: "I think that question is personal. It's not a governmental question. It's a personal something. It has nothing to do with government issues."

He said his role as minister is "not to support an individual. I support Government."

Nghimtina emphasised that "everybody should do their best" when appointed in positions.

Later, the minister said that it was "a very big insult to say I don't support the Air Namibia MD. It's a very big insult. It's a lie. The one who told you is somebody who wants to create confusion."

Namases yesterday equally denied the allegations. She said when they require support, they approach Government. "If there is no money, we will be told there is no money. But if there is money, yes [we get support]."

She said Air Namibia was unable to pay its fuel bill at Engen Namibia "towards the end of last year".

Although she said she was not at liberty to disclose the amount owed to Engen Namibia, 40% of the airline's revenue is gobbled up by its fuel bill.

Yesterday, it was reported that Air Namibia owes the fuel company more than N$20 million.

The reason for the airline's inability to settle the fuel account was partially as a result of the pilot strike late last year. "We are in talks with Engen to remedy the situation," Namases said.

In the meantime, Air Namibia has had to resort to refuelling in Luanda, Angola, "and other out-stations where we have paid-up accounts". She emphasised that this was "not sustainable".

Namases said it was "difficult to say" whether or not Government would come to their rescue to solve the current crisis.

Nangula Hamunyela, the MD of Engen Namibia, said that the agreement with Air Namibia had not been terminated. "It's just technical issues from their side [hampering the agreement]."

She further said they had not told Air Namibia to stop refuelling with Engen, and that the airline decided that on its own.

According to Hamunyela, they have a month-on-month credit agreement with the airline.

Namases, the airline's former human resources manager, was appointed as the Air Namibia boss after a drawn-out selection process during which she acted as the MD.

Air Namibia has been riddled by debt and has had to beg for bail-outs time and again. As recently as September last year, debt reportedly amounting to N$3,2 million led to the grounding of an Air Namibia aircraft at Victoria Falls in Zimbabwe.

The money was owed to the Civil Aviation Authority of Zimbabwe (CAAZ) for outstanding landing, route and passenger fees. A total of 24 passengers were stranded for four hours in Zimbabwe as a result of the incident.

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