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Tuesday 27 October 2020
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The legacy continues…

“Air Namibia will never be profitable”. These are the words from an interview with Insight Magazine with Kosmas Egumbo, the then Managing Director of Air Namibia in 2008.
Slightly more than a decade later, these words have never rung truer. Beset by a litany of challenges, the current financial year is certain to be among the worst for the national airline.

With 11 airlines operating in Namibia, aviation experts believe that Air Namibia no longer has a strategic imperative as clients are well served by competitors such as Qatar Airways, South African Airways, British Airways and KLM.
Instead of Air Namibia serving its flying clientele, the airline spends a significant amount of time in judicial matters.
A multi-million dollar court judgement with Challenge Air, an arbitration matter with the company who operates its in-flight magazine, three months behind on servicing the lease agreement with West Air, N$ 500 million dollar debt with the Namibia Airports Company for ground handling and now enters the repossession of aircraft engines by Rolls Royce within the next week.
The national carrier has been leasing four Embraer 135 aircrafts for N$2.6 million monthly, for the last nine  years. Two jets are operational with a third jet believed to be cannibalised for parts and a fourth jet which is stationary at the Eros Airport due to a “bird strike”. The Patriot has it on good authority that due a decision which saw a cancellation in insurance payments which were deemed “too expensive”, the cash stripped airline is unable to have the engines repaired.  Rolls Royce have confirmed the possibility of “taking these engines off within a week”, unless payment is made for the N$ 83 million dollars currently in arrears. This would effectively render the airline dysfunctional exacerbated by a further debt incurred when the airline leased 4 jets from Namibian aviation company West Air who is believed to be owed funds for three months namely March, April and May 2019.

NAC compromised
In March this year, The Patriot reported that it has run out of patience with sister company Air Namibia for not paying its dues for landing fees and airport taxes.
The escalating debt stood at almost N$200 million in 2017 according to newspaper reports but now stands at just below N$500 million, an amount that has escalated over the years and never been settled.
it is believed that if Air Namibia had 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.

Enter other carriers
The Patriot has in its possession a copy of a letter which was written to the NAC where other carriers are demanding the ‘same treatment’ as Air Namibia.
Citing unfair treatment, the carriers are now threatening to lodge a complaint with the Namibia Competition Commission.
The demand is “give us the same treatment” highlighting the violation of the Competition Act which is tasked with promoting competitive market conditions through investigation and prosecution of anti-competitive activities. A further headache for the Air Namibia remains the lease of the long haul fleet.  Believed to be an agreement signed during the era of Theo Namases as Managing Director, these A 330 planes come at a cost of U$ 450 000 on a monthly basis. No exit clause exist for this agreement and despite Government intervention by Minister Jooste, the “Achilles heel”  remains.
In an earlier interview with Jooste, the minister admitted that “the lease agreements are extremely high and they are twelve year lease agreements.
We are in year six now and there is no exit clause to those lease agreements at all.
We are paying in foreign currency so you can imagine,” said the minister.




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