Namibia: Airlines Eye Stake in Air Namibia

Air Namibia plane (file photo).
5 September 2019

Three major airlines - South African Airways, Ethiopian Airlines and German-based Lufthansa - have all shown interest in acquiring part of cash-strapped Air Namibia.

This is set out in the latest documents seen by The Namibian, showing that public enterprises minister Leon Jooste spearheaded negotiations between Air Namibia and Lufthansa, which appears to have a head-start over the other interested airlines.

His role, however, attracted strong criticism from some government officials, who accused the politician of sidelining key state agencies in the talks.

Jooste wrote to Air Namibia's board chairperson Dee-Sauls Deckenbrock on 28 August 2019, informing her that the Cabinet committee on treasury (CCT) had allowed him to engage several airlines to gauge their interest in entering a strategic equity partnership with Air Namibia.

"Three airlines, namely South African Airways, Ethiopian Airways and Lufthansa indicated an interest to pursue further discussions," the minister said.

Jooste added that the transport and finance ministers agreed that Air Namibia can engage these airlines "as a matter of urgency to ascertain their appetite for a potential strategic partnership with Air Namibia".

He also asked Air Namibia to consider appointing an expert to assist the national airline in these complex negotiations due to a lack of capacity in the company/

"The services of the same expert may be required to assist in negotiations to terminate the A330 lease agreements at an opportune time and appropriate manner after a final decision is taken on this matter," he said.

Jooste urged Deckenbrock to fast-track the process, and see if there was a need for any tender exemptions.

LUFTHANSA

Documents seen by The Namibian show that Jooste wrote to Lufthansa on 15 July 2019 in a letter titled 'Potential strategic partnership with Air Namibia'. It is unclear if he also wrote to other airlines.

In the letter, he briefly profiled Air Namibia, and explained to Lufthansa chairman and chief executive Carsten Spohr the positive impact Air Namibia had on the growth of tourism in Namibia.

"It is with this in mind that the government of Namibia is desirous of attracting a strategic partner for Air Namibia to optimise potential future growth opportunities for the airline," he said.

Jooste added: "The government may consider a partnership in the form of a revenue-sharing joint venture arrangement, or more ideally in the form of an equity-based investment in the airline and all its operations".

He furthermore requested Lufthansa to indicate if it would be interested "in such a proposed commercial agreement with Air Namibia".

Spohr responded three weeks later, saying Lufthansa would look into the commercial and legal aspects of such a deal.

"As there are several layers connected, we would like to have a closer look into both the commercial aspects as well as the legal implications, especially competition law requirements," he stated.

Lufthansa's chief asked for time to clarify certain issues, but informed Jooste that they had already contacted Air Namibia's acting chief executive officer Xavier Masule to start discussions.

Two senior officials at public enterprises as well as three executives at the airline, who spoke to The Namibian this week, said they are unaware that Jooste was in discussions with airlines which could partner with Air Namibia.

"This comes as a surprise to us. We just learn from media reports," an official, who declined to be named, said.

Talk is rife that Jooste is going behind Air Namibia's back as well as his own ministry's officials by engaging airlines across the globe to secure a strategic partner for the troubled airline. Sources said the process was supposed to be spearheaded by the transport ministry, which has now been relegated to a mere spectator.

One board member at the national airline said there is a trend where the board chairperson is the only person consulted by Jooste.

COUNTER

Jooste told The Namibian yesterday that his involvement in the Air Namibia process is guided by Cabinet, adding that it was necessary for him to talk to other airlines instead of the board.

The minister added that he was tasked to write to several airlines to gauge the appetite for a potential strategic partnership with Air Namibia.

"Such a strategic partnership may involve a change in shareholding, hence the involvement of the government as the shareholder. The process has since been handed over to Air Namibia, and they may engage these airlines, whereafter they will have to report to CCT before any agreement may be concluded," he said.

Jooste refused to say whether he also wrote to other airlines, or just Lufthansa, citing confidentiality "since the item is under discussion at Cabinet level".

The Namibian understands that Air Namibia had a meeting with Lufthansa, which could result in an agreement being signed in the coming months.

"I am informed, and CCT is equally informed of this meeting that took place. It is aligned to what we have been tasked with, and not in conflict therewith," he noted. It is understood that Jooste met Airbus sales director Michael Guiraud and the airline's marketing head for the Pacific and sub-Saharan Africa, Joep Ellers, in Windhoek on 12 July 2019.

Jooste said: "This was merely a courtesy meeting since the Airbus officials were in town, having been invited to attend a function at the French embassy at the time. Airbus is an important stakeholder, and the two Airbus officials shared impressions around new developments on the various products they offer".

He added that Air Namibia's board chairperson was also part of the meeting. Finance minister Calle Schlettwein told Cabinet earlier this year that the government had pumped N$8,3 billion into Air Namibia from 1999 to 2019.

He said the airline's historic debt is N$1,3 billion, and that Air Namibia might not operate beyond 12 months.

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