Namibia: Air Namibia Gets N$500m Loan Guarantee

19 December 2019

Windhoek — Government has agreed to guarantee N$500 million in loan for the struggling Air Namibia.

This support from its sole shareholder should see the airline reinstate five aircraft in its fleet of 10, in order to upscale its services to domestic, regional and international routes. Coupled with confirmation yesterday that all litigation matters between Air Namibia and Challenge Air SA, were amicably resolved, should put the struggling airline on more solid footing for the short-to medium-term for a more favourable outlook in 2020 and beyond.

"We have agreed to provide the guarantee for them to raise N$578 million. This is basically a bridging facility until we discuss the matter in Cabinet early next year.

A full bailout will require a great deal, more than this," public enterprises minister Leon Jooste told New Era yesterday. Finance minister Calle Schlettwein also confirmed that loan facilities have been opened for the national airline.

However, Air Namibia's board chairperson Escher Luanda was more tight-lipped on the latest developments, telling this reporter "it is premature to comment" and that "the airline's communication department will be issuing a statement regarding assistance provided by the shareholder within the next few days". Earlier this year, Air Namibia's only shareholder, the government, refused to grant the struggling airline a requested bailout of N$2 billion.

During a mid-term national budget review in October, Schlettwein confirmed that no capital injection would be made available to bail out Air Namibia, which has received more than N$8 billion from the state between 1999 and 2019.

Challenge Air battle

Meanwhile, Air Namibia's legal battle with Challenge Air was confirmed to have drawn to a close yesterday as a deed of settlement in respect of all disputes whether in Namibia or in some other parts of Europe was duly executed.

The Air Namibia and Challenge Air dispute emanated from a lease agreement in the late 1990s when the former agreed to lease a 351-seat plane from Challenge Air. The agreement was subsequently cancelled when Air Namibia said the aircraft in question was believed to be defective.

Challenge Air then took the legal route to demand N$400 million from Air Namibia. The settlement means that all attachment orders of Air Namibia assets issued in line with the German court directives are to be suspended per the deed of settlement entered into, which will enable Air Namibia to trade normally going forward.

According to Air Namibia spokesperson Paul Nakawa, the consultations between Air Namibia and Challenge Air entailed a process in which all stakeholders, including the Air Namibia shareholder, and relevant legal teams, were consulted.

"The settlement agreement is an outcome of such consultations. The agreement has been duly executed to the satisfaction of both Air Namibia and Challenge Air. Given the fact that the terms of the agreement are confidential, Air Namibia is not in a position to divulge what the exact terms, or basis, of the terms are," said Nakawa.

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