quote:

Government in AirNam pickle

by Charmaine Ngatjiheue News - National | 2020-07-16

NAMIBIAN taxpayers will have to fork out billions – whether Cabinet decides to liquidate Air Namibia or restructure and keep it afloat.

Information gathered shows the government would still carry the burden of servicing Air Namibia's lease agreements if they opt for liquidation, which would also include paying for other urgent matters, like retrenchment costs, and penalties for aborting existing contracts.

While the Cabinet committee on treasury, headed by minister of finance Iipumbu Shiimi, says the airline needs a substantive N$7 billion to be sustainable, Air Namibia spokesperson Paul Nakawa says the company's operational budget was between N$2,2 billion and N$2,5 billion annually (pre-Covid-19).

Shiimi says this amount also takes into account an outstanding debt of over N$5 billion, including leaseholds.

According to Air Namibia they are still perplexed about the origin of the N$7 billion proposition by the government.

“This figure cannot be confirmed as having come from Air Namibia officially. We do not have the breakdown thereof or what it is made of,” Nakawa says.

Ironically, the government remains mum, without giving a breakdown of how they calculated the N$7 billion figure.

“Kindly take note that CCT is seized with this matter. We will only be in a position to respond to questions once all stakeholders are consulted,” Shiimi says.

Nakawa says a number of considerations and assessments are required before a decision such as liquidating or shutting down an airline such as Air Namibia can be made.

“The airline has obligations which are guaranteed and underwritten by the government, which if Air Namibia is no more, the obligations to service those commitments passes to the government. This includes lease payments of Airbus A330 aircraft,” he says.

He says the other implications include the effect a shutdown would have on employment, directly on Air Namibia and indirectly on employment in related industries and induced employment opportunities.

“With the loss of jobs comes the loss of tax income to the government in the form of employee taxes, VAT and company income taxes of all organisations/employees in the value chain,” he says.

Nakawa says the government also needs to make a relevant political decision.

“As a sovereign state, there surely will be a dent in this aspect as well, including derailing national development goals set and the attainment thereof. Do you think Germany will allow Lufthansa to go under, or Britain will allow British Airways to disappear, or the USA letting American Airlines be liquidated?”

Nakawa says the government also needs to consider the legal process.

“While owned by the government, Air Namibia is a company registered in terms of the Companies Act. Requirements of the act should be met in collaboration with creditors involved, who stand to lose out in the event of a shutdown,” Nakawa says.

Minister of public enterprises Leon Jooste last week washed his hands of the financially troubled Air Namibia's failure to meet international civil aviation industry guidelines.

Jooste said the airline needs to find an internal solution to deal with their failure to meet guidelines.

This failure was one of the reasons why the airline's licence was suspended recently by the Transport Commission of Namibia.

However, a High Court order overturned the suspension.