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Wednesday 26 June 2019
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“Poor, poor management” reason for Air Namibia insolvency – Schlettwein

Minister of Finance Calle Schlettwein said that Air Namibia’s dire financial state is as a result of “poor, poor management” and government will have to think twice whether it is beneficial for the tax payer to give the national airline another multi-billion dollar lifeline.
Stating that it is safe to say Air Namibia is insolvent, Schlettwein said that it was brought to his attention that the airline is in need of almost N$500 million to finance the judgement they have, following a legal battle over a lease agreement gone bad.
Making reference to Air Namibia’s previous request for N$3 billion in order to turn the airline into a profitable company, the finance minister said that government would have to think twice whether they should bail out the airline, or whether they should invest the money in other areas such as education and housing.
“We were informed about this debt and we have to ask ourselves whether it is beneficial or worthwhile for the shareholder to put in that much money,” the minister said.
He further said that it is unacceptable that Air Namibia has outstanding annual reports and that its financials are not up to date.
He was responding to questions on why the airline was allowed to have outstanding financials and annual reports.
“The financial status of Air Namibia is dire and it is nothing but poor, poor management,” the minister said.
Public Enterprises minister Leon Jooste last week said that Air Namibia will not receive any future funding, unless it is aligned with the new integrated strategic business plan for the national airliner.
Jooste who met with the new Air Namibia board last week said that they are currently in the middle of identifying a new business model for Air Namibia.
“The new board has already given the management timelines to bring all financial statements up to date and I’m confident that Air Namibia will be fully compliant before the end of the year,” Jooste told The Patriot.
An official within the Ministry of Public Enterprises, Renier van Rooyen said that the airline is now working with an auditing firm to prepare financials for the state-owned company and to update the outstanding financial records.
Van Rooyen confirmed that the airline in a meeting recently asked for half-a-billion Namibian dollars, but that they will only get it once the present financials that have been prepared by an accounting professional.
The airliner has been facing financial woes including several legal actions such as the Challenge Air judgement debt of more-than N$400 million dollars and an arbitration matter with Namibian company Media Nova CC over the airline’s inflight magazine – Flamingo.
They are said to risk the writing off of between N$3 million and N$4 million in legal fees.
It was reported in 2015 that Air Namibia was involved in two lawsuits of close to N$1 billion, where they lost N$337 million in an   arbitration matter.
They were also involved in a billion-dollar lawsuit with BCI Aircraft Leasing Incorporated, also over the leasing of aircraft.
Meanwhile, Air Namibia continues to lose money through their European bank accounts.
The Patriot understands that only last week, the airline lost over N$2 million which was deducted from their oversees account, this is in addition to the close-to N$10 million withdrawn from their account previously.
The deductions are as a result of a warning by Challenge Air that they will be blocking all monies paid into the account, until they reach 25 million Euros (N$391 million).
When asked about the several legal suits the airline is or was previously embroiled in, the finance minister said that it is disappointing and pointing out the Challenge Air matter, the minister said that he does not know how Air Namibia allowed a N$60 million debt grow to N$400 million.
The 2017/2018 national budget indicated that Air Namibia was allocated N$486 million for that financial year.
Their budget allocation increased to N$494 million for the 2018/2019 and then N$498 million for  the 2019/2020 financial year. Air Namibia’s general manager for commercial services and acting general manager for finance, Xavier Masule in September last year said that they would need a N$3 billion bail-out from government to invest in infrastructure and assets.
It was previously reported that Air Namibia had received over N$6 billion in bailouts since 2000, as they are considered one of the state owned parastatals.




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