Namibia: Frozen Funds Wreak Havoc on Air Namibia Operations

Air Namibia plane (file photo).

The ongoing court case against Air Namibia by now defunct European-based Challenge Air, which is demanding N$400 million, continues to wreak havoc on the national airline’s liquidity to the extent that it is affecting regional and domestic flights and frustrating domestic travellers.

The legal case between the two entities stems from a March 1998 sublease agreement that has since seen Air Namibia’s funds frozen in European banks, leaving the national airline with no option but to cancel and scale down on regional and domestic flights.

The dire situation at Air Namibia was confirmed by its spokesman, Paul Nakawa, yesterday. “Due to the ongoing court case by Challenge Air, Air Namibia’s funds have been frozen in Europe and this has caused a severe liquidity problem at the airline,” Nakawa stated.

However, he noted that he would have to speak to Air Namibia’s legal team regarding progress made in the drawn-out legal battle.

The lack of liquidity has left Air Namibia at pains to service its operational obligations, with a number of regional and domestic routes bearing the brunt of the empty coffers, often leaving passengers frustrated and stranded.

A document seen by New Era confirms that as of June 3, 2019, Air Namibia suspended all flights to Luanda, while flights from Windhoek to Johannesburg have been scaled down one per day from the usual three per day. In addition, Windhoek to Cape Town flights will reduce by one, leaving two flights per day remaining on this route to be operated by an Embraer ERJ and one flight using an Airbus A319 going via Walvis Bay.

In the confidential document, sent from Air Namibia’s Interim CEO, Xavier Masule, to Executive Director in the Ministry of Works and Transport, Willem Goeiemann, Masule emphasised that the risk associated with the new arrangement is that the entire regional operation could be in jeopardy if any one of the aircraft develops a technical problem.

“The further risk relates to the fact that SAAT (South African Airways Technical) is the maintenance services provider on this fleet, and they might not be in a position to attend to the aircraft (as is the case with our other A319 aircraft).

“During April 2019, a payment of N$19 million was made to SAAT, a further N$6.9 million will be paid to them by 31 May 2019. SAAT will be in a position to re-consider and allow provision of required services if we make another substantial payment for minimum N$20 million with commitment on how the balance will be settled,” read Masule’s letter.

In fact, the number of serviceable Airbus A319 aircraft in Air Namibia’s fleet was reduced to one aircraft as of Monday, June 3 out of a total of four aircraft. The three aircraft which are not in service are undergoing mandatory maintenance checks but will only be released if Air Namibia can come up with millions of dollars for work completed.

One Airbus A319 was reportedly undergoing a heavy scheduled maintenance check with SAAT, which was scheduled to be completed by June 7. However, SAAT indicated that once the work is done, the aircraft will not be released pending settlement of the account.

Another Airbus A319 is currently in Cyprus, where the maintenance work was completed but this aircraft was also held until after Air Namibia paid N$5.1 million for the work done. Once that aircraft is released from Cyprus it was to be flown to Johannesburg for an engine change to be done by SAAT before being able to resume commercial flights. Again, SAAT indicated they would not perform the required work prior to the maintenance account status being cleared.

The third Airbus A319 was also due to undergo a maintenance check from June 3 and had to be grounded on that day. SAAT again indicated that it will not accept the aircraft in their hangar for maintenance while Air Namibia’s account was not cleared.

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