Air Namibia could be liquidated today

Namibians could kiss their 75-year-old national airline goodbye today - if the court rules in favour of a liquidation application by a Belgian outfit.

29 January 2021 | Transport



Air Namibia board chairperson Escher Luanda told government this week that the national airline could be liquidated today.

In a letter to public enterprises minister Leon Jooste dated Wednesday, 27 January, Luanda said if no solution is found within 36 hours to appease Belgian company Challenge Air – which Air Namibia owes N$253 million from a lease that went bad in the late 1990s – the national flag-carrier could close shop today when the Windhoek High Court rules on the liquidation application by the Belgians.

If liquidation is effected, Luanda warned that 644 Air Namibia employees would lose their jobs and many cross-default debts owed by Air Namibia will kick in.

Once liquidated, Luanda hastened to point out, neither government as the shareholder nor the board would have any powers over the affairs of the airline.

The national airline has until today to demonstrate its ability to repay its debt – or have its wings clipped.

Real possibility

“It appears that Air Namibia could be heading for a real possibility of liquidation unless something is done over the next 36 hours,” Luanda said in the letter also copied to President Hage Geingob and Prime Minister Saara Kuugongelwa-Amadhila.

“To this end, Air Namibia requests that the shareholder [government] assists the airline in providing the offer to pay Challenge Air as per the offer made to Challenge Air… and for the shareholder to consider payment of the overdue amount,” he wrote.

A week ago, Air Namibia offered to pay one-third of the money owed to the Belgians by 1 June 2021 and a monthly payment of N$4 million thereafter until the debt is cleared.

Challenge Air rejected this offer, instead demanding full payment by today [29 January] and to clear the remainder of the outstanding balance by 1 April 2021.

Lawyer Sackey Akweenda, acting for Air Namibia, and government attorney Matti Asino advised government that the settlement offer to Challenge Air must constitute a lump sum on the outstanding sum.

New airline

Namibian Sun understands that government’s general attitude is to have Air Namibia liquidated so that a new airline - with a leaner and more sustainable business model - can be started.

“The ministers of public enterprises and finance refused to settle because they want the airline liquidated,” a senior government official privy to the matter told Namibian Sun.

High Court acting judge Esi Schimming-Chase in December ruled that Air Namibia and the ministry of public enterprises had to furnish Challenge Air representative Anicet Baum with a reasonable and acceptable payment plan.

Baum had filed for Air Namibia’s liquidation, arguing that it is insolvent and unable to repay its debts, which amount to approximately N$253 million incurred for the lease of a Boeing 767 back in 1997.

Air Namibia cancelled the lease agreement after it had found that the aircraft was defective.

Challenges and lawsuits

In 2008, Challenge Air obtained a judgment from a German court which ordered Air Namibia to pay it US$6.5 million for unpaid rent, maintenance and insurance of the Boeing.

In another judgment in July 2011, Air Namibia was ordered to pay Challenge Air an additional US$13 million in interest on the outstanding debt.

Late last year, the government provided a guarantee of N$578 million to allow Air Namibia to borrow money from commercial banks and keep Challenge Air from attaching its fleet of Airbus A330-200 planes used on the Frankfurt route.

If liquidated, the airline would get little in return for its assets, Luanda warned. Air Namibia has two Airbus 319s and four Embraer 135 regional jets that are paid off as well as its head office building.

“The liquidation would erode any possible value in the airline’s assets, with the six aircraft and the head building having to [be] auctioned at negligible amounts of as little as 20%,” Luanda wrote.

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