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Wednesday 20 March 2019
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Air Namibia continues to fly despite huge debt

…as NAC turns to IATA

 

The struggling national airline owes the Namibia Airports Company (NAC) just below N$500 million for landing fees and airport taxes, a debt that has escalated over the years and never been settled.
The Patriot understands that the escalating debt stood at almost N$200 million in 2017 according to newspaper reports.
While both entities are mum on giving light on the way forward, citing confidential clauses, policies and regulations relating to standing agreements, The Patriot has learned that NAC has run out of patience in expecting Air Namibia to pay its due and has taken a drastic route.
This publication has learned that the nearly half a billion dollars owed to NAC by Air Namibia has pushed the airports company into entering an agreement with the International Air Transport Association (IATA) for the collection of money from Air Namibia (and all other scheduled airlines) through IATA.
The agreement, which The Patriot has seen was signed by NAC acting CEO Lot Haifidi on 21 September 2018 and IATA’s Senior Vice President Alexander Popovich signed it on 10 December 2018.
It is believed that with the money Air Namibia paid the money it owes the airports company, NAC would by now have completed capital projects to improve the infrastructure at Hosea Kutako International Airport, Eros Airport and Ondangwa Airport.
Air Namibia is believed to be using the funds owed to NAC to subsidize its operations, which has a huge negative impact on NAC to perform its statutory function of effectively operating and managing airports.
NAC included all other scheduled airlines in the collection agreement with IATA for transparency and consistency to prevent being accused of only targeting Air Namibia.
Experts say the IATA agreement will result in NAC saving a lot of money on the number of staff required to perform the function of collecting money from airlines, and savings made in that regard will further be channeled to other organizational priority areas where they would be put to good use. NAC’s decision to enter into an agreement with IATA is also regarded as good for budgeting purposes as the institution will be in a better position to effectively budget if there is at least guaranteed income from scheduled airlines including Air Namibia, as opposed to the situation where fees billed to the national airline for using NAC facilities never got paid over to NAC despite endless demands in that respect. Air Namibia’s Paul Nakawa, Manager Corporate Communications said the airline has a legacy debt with the NAC which the airline services within existing financial constraints.
“Air Namibia however remains committed to its relationship with the NAC and is committed to addressing the legacy debt with the NAC towards a mutually beneficial conclusion,” said Nakawa.
“Furthermore, please take note that, the management teams of both Air Namibia and NAC engage one another at different levels on an ongoing basis, to ensure that our operations and cooperation continue optimally amid challenges that are normal in any working relationship or institutions,” he added.
The IATA agreement is seen as a great debt management initiative as it proactively prevents airlines from owing huge amounts of money to NAC, and it in particular avoids NAC’s exposure to unprecedented substantial debts of nearly half a billion by the likes of Air Namibia, as is currently the case.
NAC’s Marketing Manager Dan Kamati declined to be engaged on the debt question, citing confidentiality.
Be that as it may be, the IATA arrangement will significantly improve NAC cash flow and enable the institution to pump money into infrastructural upgrades and maintenance projects at various airports, as well as investing in safety and security training and operational implementation.
During the term of the agreement signed, NAC agrees to pay IATA monthly administration fees calculated at various different rates based on different charges and categories.




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