Another Billion for Airnam Turnaround

Jo-MarÉ Duddy

22 July 2011

The taxpayer will have to fork out nearly N$1,2 billion over the next three years to finance yet another turnaround strategy for Air Namibia, Finance Minister Saara Kuugongelwa-Amadhila said yesterday.

Kuugongelwa-Amadhila said the new take-off plan carries a “high price tag”, but that it will improve operational efficiency such as timeliness, as well as buy and lease new aircrafts for more regional and international flights.

The N$1,19 billion is double the amount Kuugongelwa-Amadhila originally budgeted for the airline when she tabled the Medium Term Expenditure Framework (MTEF) for 2011-14 in March.

It is also three times the money Government spent on the struggling parastatal during the last three years.

Air Namibia came up with its first turnaround strategy in 2003. By the end of 2009, the airline had guzzled nearly N$2 billion in bailouts. Since then, Government has pumped in N$156 million in 2009-10 financial year and considerably more than N$80 million in the current one.

Kuugongelwea-Amadhila yesterday said Cabinet is “more confident this time”, as the plan is “integrated in nature” and not just a bail-out.

The Minister told a media conference that Cabinet earlier this month decided to “bite the bullet”and support the new blueprint, since Air Namibia directly and indirectly employs 10 883 people, about 2,5 per cent of Namibia’s entire workforce. The airline also contributes to the country’s gross domestic product (GDP), she said. In 2009, its share was N$1,5 billion.

At the same meeting, Cabinet decided to transfer the responsibility for Air Namibia from the Minister of Finance to the Minister of Works and Transport with immediate effect.

Air Namibia’s new business plan was designed with the help of the International Air Transport Association (IATA). It includes buying two new Airbuses at about US$90 million, nearly N$630 million at yesterday’s exchange rate.

Kuugongelwa-Amadhila said Government will also issue a guarantee so that Air Namibia can lease two more Airbuses, previously operated by Air Berlin.

Theo Namises, acting managing director of Air Namibia, said the leased aircraft will arrive in August or September, while the bought planes is scheduled for November next year.

Part of the new budget approved by Cabinet will allow Air Namibia to settle its outstanding debt of N$58,5 million at Bank Windhoek and N$260 million at Standard Bank Namibia. The airline must also repay the Development Bank of Namibia (DBN), the Minister said.

If the new plan is successful, Air Namibia will be able to break even in five years.

Kuugongelwa-Amadhila said the aim of the business plan is to have a “full service carrier with a geographically focused network which services the traffic flows to and from and within Southern Africa”. This, according to the Minister, will create a “hub network at Hosea Kutako International Airport”.

The new concept will also allow Air Namibia to “forge partnerships and develop interline arrangements with key carriers at major international airports”, she said.

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