Air Namibia Set To Receive Government Loan

by Mark Finlay
simpleflying.com
December 22, 2019

Windhoek based Air Namibia is all set to receive a government loan so that it can conduct repairs on half of its fleet of aircraft.

Wholly owned by the Government of Namibia, Air Namibia operates a fleet of 10 aircraft from its main base of Windhoek Hosea Kutako International Airport (WDH) and a smaller hub for domestic flights at Windhoek Eros Airport (ERS).

Trading as Air Namibia (Pty) Limited, the national flag carrier operates scheduled domestic, regional, and international passenger flights.

Air Namibia has constant money problems

Like many of the world’s state-owned airlines, Air Namibia is more of a vanity project than a viable business. It is constantly being hindered by a lack of financial resources. Back in October of 2019, the airline asked the government for an N$2 billion (USD137 million) cash injection.

The plea for more money fell on deaf ears with Finance Minister Calle Schlettwein lamenting on Air Namibia’s failure to turn a profit. While speaking after the decision not to loan Air Namibia money, the Windhoek Observer newspaper quotes the minister of saying:

“If you look at Air Namibia, you have to realize that for the last 29 years there was not a single year where Air Namibia contributed to the state coffers; it has never made money.

“We are at a point where we have to crucially think; if we put in what they have asked us to put in, that is N$2 billion, is that the best way to spend money to create jobs, to grow the economy? The answer is obviously no.”

The government has retreated from its tough stance

Now two months down the road the government has relented somewhat by agreeing to provide N$500 million (USD35 million) so that it can service its aircraft.

According to aviation website CH-Aviation, two of Air Namibia’s E135ERs and one of its three Airbus A319-100s are currently not flying. When talking about the latest loan, Minister of Public Enterprises Leon Jooste said:

“We have agreed to provide a guarantee for them to raise NAD578 million (USD40.7 million). This is basically a bridging facility until we discuss the matter in the Cabinet early next year. A full bailout will require much more than that.”

Minister of Finance Calle Schlettwein also verified that a loan facility had been opened for Air Namibia to draw upon.

The airline’s chairman Escher Luanda was more guarded with his comments telling local New Era newspaper that it was “premature to comment” and that “the airline’s communications department will issue a statement on the shareholder’s assistance in the coming days.”

This latest development comes on the back of a lengthy dispute between Air Namibia and a wet-lease agreement dating back to 1998 with the now-defunct Belgian carrier Challengair that has been “amicably resolved.”

This is big news for the troubled airline as it will free up millions of dollars that were frozen in European banks during the litigation.

Air Namibia should be sold

Like most state-owned airlines, Air Namibia is not profitable and never will be given the way it currently operates. The decision to liquidate the airline and sell off its assets is a difficult one for the government to take, as it needs Air Namibia to help grow its important tourism industry.

Fed up with forever having to bail Air Namibia out, the Namibian Government has some tough decisions to make. One option for the government is to sell the airline to Lufthansa in a similar way that the Italian government t is trying to get the German airline to buy Alitalia.

Failing that Ethiopian Airlines is the biggest airline on the African continent and could easily incorporate Air Namibia under its umbrella.