Namibia: Aviation Industry Needs N$177m

THE domestic aviation industry needs a cash injection of N$177 million (US$9,5 million at the time) to survive post Covid-19.

The industry needs these funds to be disbursed over 24 months, beginning May 2020, according to the Aircraft Owners and Pilots Association of Namibia (Aopa) in court documents, after the Namibian Employers' Federation and five other companies took the government to court to have the suspension of parts of the Labour Act during Namibia's Covid-19 state of emergency declared unconstitutional.

Aopa says the funds should be disbursed in tranches of N$70 million before 31 December 2020, N$82 million before 31 December 2021, and a further N$25 million before 31 May 2021.

"Analyses also demonstrate these funds should be disbursed in the form of grants, as aviation operators would not be able to service soft loans, even at zero interest, due to the industry's high operating costs and low margins," Aopa says.

The commercial aviation industry in Namibia employs roughly 450 people and has links to the tourism, conservation and communal conservancy support sectors.

Aopa says without the injection, the majority of the commercial aviation companies will face permanent closure, which will also negatively affect the Namibia Airports Company, and the Namibia Commercial Aviation Authority.

The association says Namibia's standing within and access to the relevant international aviation organisations may also be affected.

"The aviation companies focused on tourism are suffering and will suffer the most. On Aopa Namibia's analysis, 5 out of 15 such companies do not show a recovery to positive cash flow at all up to 2022, and closure is virtually imminent," it says.

According to Aopa, the remaining 10 companies show a return to viability, but most only by mid-2022 - thus after two years of negative cash flow, with the earliest date of return to positive cash flow being November 2021.

"Without the financial injection of N$177 million, it will be impossible to run any of the businesses without drastically reducing overheads. As part of this process, companies would have to effectively engage the mechanisms in the Labour Act to manage and reduce their wage bills. They have had to do so already, and must retain the ability to continue doing this if there is to be any chance of saving the companies and, in fact, the industry," the association says.

It further states an unhealthy aviation industry will render several other sectors in the economy unviable and will cause valuable hard currency to be externalised.

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