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Thursday 18 July 2019
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Fixing the broken airline

AIRnAM

…No Annual Report since 2006

Despite receiving billions in bailouts from the State and calls to privatize the national airline, Air Namibia has failed to account to parliament and to taxpayers who keeps the airline in the air, having last presented an annual report in 2006.
Having last submitted an     annual report a decade ago, Air Namibia has promised to present a consolidated report on how it spent taxpayers funds by the end of the year.
This is however not a situation the incumbent leadership is pleased with, with the airline’s Manager for Corporate Communications Paul Nakawa stating that work is underway to compile a consolidated report that spans from 2006 to 2015 that will be made public before the end of the year.
“We are attending to this and we have already appointed a competent consultant who is busy carrying out the process,” Nakawa said.
According to Nakawa: “Without pointing any fingers, it cannot be right that we do not submit annual reports while being funded by taxpayers. That is why we have decided to go for a consolidated report to account for all these years.”
The airline has received over N$4 billion in bailouts since the turn of the century.
Public enterprises are compelled by law to submit annual reports on their operations of the public not later than six months after the end of each financial year.
As the airline works to attain self-sustainability, Nakawa said several aspects such as the cost of leasing of aircrafts continue to pose a challenge.
Air Namibia currently makes use of 10 aircrafts, however, it only owns two of the aircrafts.
“Two of these ten aircraft are on the balance sheet of Air Namibia, as they were bought in full by the shareholder while eight of the aircraft are being leased from lessor companies. The two aircraft that are owned by the airline are A319-100,” said Nakawa.
Air Namibia is currently leasing eight of its ten aircraft from lessor companies through a Dry Lease agreement.
As per the agreement, Air Namibia is responsible to take care of costs related to insurance, crew, ground staff, supporting equipment and maintenance.
Nakawa said he cannot divulge the amount the airline spends on leasing the eight aircrafts due to the confidentiality agreement between the airline and the lessor.
“It is the airliner’s responsibility to have these in place. And whether you buy or rent, the airline chooses interior designs of the cabin in line with their branding and corporate identity and market requirements, and these add on to the huge budget of the monthly rent amount or the exact prices if buying,” Nakawa explained.
Nakawa said buying or leasing aircraft is a big investment, and Air     Namibia spends handsomely in the lease payment and well as maintenance of these aircraft plus fuel.
According to Nakawa: “Buying or leasing an aircraft has its both     advantages and disadvantages.  In most cases, it is the challenges related to affordability just like with the houses, you only rent because your affordability status to buy is not there, due to huge capital outlay,” he explained.
Many of passenger airplanes flying in recent times are leased by their airlines from big aircraft leasing companies.
“The main reason is, it is better as you pay every month as you are renting these aircraft as it is a huge investment. Aircraft have a long life span and useful life which far exceeds the period of loan repayment, so the option to buy is very noble. During the life of using aircraft, you also maintain power manufacturer specifications, which extends life even longer,” he said.
“When well maintained at end of life these aircraft can still be sold to second hand market or stripped for parts and sold as such. The Lifespan of aircraft is up to 30 years, and beyond while loan is paid within a period of 12 years, so you can enjoy use of a fully paid off asset from year 13 to year 30, while if you were renting the moment you stop paying you lose right to use the aircraft,” said Nakawa.
Air Namibia received N$1.1 billion during the 2013 financial year, this was the biggest allocation ever made to a parastatal since independence. In 2014 it received N$362 million and N$304 million in 2015.
The national airline is set to receive N$695 million in state funding during the 2016/17 financial year.




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