By Kelvin Chiringa
In another huge set-back for the national flag carrier, the German courts have attached N$160 million from an Air Namibia bank account in Germany in order to pay the now defunct European based Challenge Air since November last year.
The two companies are locked in a legal battle in which Challenge Air is demanding payments to the tune of N$400 million which came about due to a lease agreement that was signed 21 years ago.
The ongoing wrangle had initially seen Air Namibia’s funds being frozen in Europe while latest reports are that this has put financial pressure on the airline to the extent that flights had to be cancelled.
The said German account is managed by a company called Avia Reps which handles all monies paid to Air Namibia on commission.
The airline has in the meantime also forked out some 300 000 Euros to its Belgian lawyer who has been handling the legal case against Challenge Air, a source privy to Air Namibia affairs has disclosed.
Air Namibia has this week been described by state owned enterprises minister as no longer commercially viable and that stakeholders were considering the liquidation route.
It is said that he has been advising the company against complying with the judgment that called for Air Namibia to make good its payments to Challenge Air. However when the board at last resolved to comply and make the payments, Challenge Air refused to entertain it, The Patriot is further informed. The Patriot has also been reliably informed that International Air Transport Association (IATA) has also blocked Air Namibia accounts.
Fall of the dominoes
The attachment of N$160 million from Air Namibia’s accounts has sent the dominoes falling as the company last week stopped paying hotels into which pilots and crew are booked every time they land in Europe.
“Crew’s been kicked out of (a) hotel in Mains (Frankfurt) due to 500 000 Euro in arrears,” a source at Air Namibia who refused to be named for fear of retribution tipped this publication.
“One pilot told us (that) Hilton in Main said that if Air Namibia would just pay a portion of the owing 500 000 Euro at the end of May, they would renew.
No payment realised and they kicked the crew out.
“It is underhanded for any company to conduct themselves in such a manner, obtaining goods and services knowing (fully) well they can’t pay.
It’s nothing short of fraud,” said the source.
More information coming from the airline has it that 11 Bidvest Lounges kicked out all business class and loyalty card holders in South Africa for non-payments as well.
“The real whammy is that the connecting passengers from France do not get their connecting flights onward from Windhoek.
Secondly, this is now high season, with five out of the 10 aircraft flying, and the one A330 due for service in Malta end of June.
So the fleet that accounts for 78% of the operational loses, the A330s, is flying, while the regional/domestic fleet that had to stop the massive damage is grounded,” said the source.
On collision course
Back home the company is on collision course with state-owned enterprise, Namibia Airports Company (NAC) which in a letter dated 22nd of May 2019 notified that it will not renew its ground handling agreement for Air Namibia at Hosea Kutako International Airport.
The letter was written by NAC’s chief executive officer Bisey Uirab to Air Namibia’s interim managing director Xavier Masule.
Uirab said he would not renew the agreement following the expiry of its initial contract duration on the 30th of September 2018.
Air Namibia’s transgressions which resulted in this drastic action by NAC appear to be manifold.
According to NAC, Air Namibia over the initial contract duration failed to adhere to clause 4 and 5 of the ground handling agreement as well as 10.2 “despite several attempts from NAC to demand performance in this regard”.
The airline also noted that it observed non-compliance with regard to the payment of consideration fee as per the provision of clause4.1 of the agreement.
Uirab also said the company’s account constantly reflect arrears over the years.
“Noting that the agreement expired on 31 October 2018, NAC is issuing Air Namibia with a six month notice effective from 1st June 2019 up until 30 November 2019, which is reasonable enough to vacate and cease your operations as a ground handler at HKIA,” said Uirab.
He said NAC will call for a national bidding process for ground handling services in due course in which Air Namibia will be “more than welcome to participate”. The bidding will be advertised in local print media.
Air Namibia has in the meantime also been reminded to settle its account on or before the exit date.