Namibia: Air Namibia Wants N$1,6 Billion

Air Namibia plane (file photo).
18 September 2019


AIR Namibia's board has warned the government that the national airline could shut down if it does not get a N$1,6 billion bailout by the end of this month.

The works ministry has, however, shot down any plans to rescue the embattled company.

These details are contained in a letter by the national airline's former board chairperson Deidré Sauls-Deckenbrock, which she wrote a day before she resigned from the board two weeks ago.

The 28 August 2019 letter asked for a short-term financial fix, while the mid-term national budget is being finalised.

“The company requires urgent shareholder capitalisation in the amount of N$1,6 billion to be paid in two tranches of N$800 million each by 31 August 2019 and 30 September 2019,” Sauls-Deckenbrock stated.

She warned that without these funds,”the imminent cessation [closure] of business operations is the most likely impact of not adequately funding the company, as required above”.

Sauls-Deckenbrock also emphasised that the parastatal wants to resolve its dispute with Belgium company Challenge Air in which they lost a court battle some four years ago.

Challenge Air and Air Namibia parted ways after the latter agreed in March 1998 to lease a 351-seater plane from Challenge Air in a deal which was subsequently cancelled because the aircraft was believed to be defective.

Air Namibia was slapped with a N$300 million bill over that lost court case.

“Air Namibia is keen to have the matter resolved, and has reached out to Challenge Air,” the former airline chairperson added.

She said they contacted Challenge Air's lawyers ENS Africa Namibia on 19 August 2019 to gauge their client's willingness to enter settlement negotiations.The request for a bailout was sent to transport minister John Mutorwa and copied to finance minister Calle Schlettwein, public enterprises minister Leon Jooste, attorney general Albert Kawana and prime minister Saara Kuugongelwa-Amadhila.

Mutorwa told The Namibian on Monday that he had seen the Air Namibia letter, but that the airline will not be bailed out.

“Well, I am not the finance minister, do talk to him about it. But I saw a letter in which he had responded to this matter. I am a member of the Cabinet committee on treasury, and I know there will be no bailout.

“Bailout coming from where? They must forget it,” Mutorwa reiterated.

Approached on the matter yesterday, Schlettwein said: “I have taken note of their request, but it is without indication of what they want to use the funds for. No cash flows, and no statements at all. So, I have written back to them, requesting for such details. I have so far received some”.

“You see, they are asking for N$1,6 billion just to pay creditors, but that is not the end of the story, there is more to it. So, it's a very complex matter, which is still under scrutiny. It's before the Cabinet committee on treasury, and we are busy formulating a strategy for them,” he added.

Jooste also said the Air Namibia matter is under discussion at Cabinet level.

Sauls-Deckenbrock resigned from the parastatal's board together with her deputy, businesswoman Nangula Kauluma, on 29 August 2019 – a day before she requested the bailout.

The two were appointed to the board for a three-year term from 1 January 2019.

Their resignations came five months after the airline's acting managing director, Mandi Samson, resigned from the position she had held for close to five years.

Air Namibia's management told a parliamentary committee earlier that the parastatal needed between N$2,5 billion and N$3 billion to invest in capital assets and infrastructure to stop relying on state bailouts.

Budget documents show that Air Namibia has received over N$4 billion from the government in the last seven years.

President Hage Geingob warned the airline last year that it must account for funds and ensure that the company becomes profitable, or risk closing down.

The national airline was allocated N$695 million in the 2016/17 financial year, and N$486 million the following year.

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