Calle clips Air Namibia's bailout wings

24 October 2019 | Transport

Air Namibia will have to fend for itself after finance minister Calle Schlettwein said government cannot afford to give in to the airline's demands for another massive bailout, as it will not create a single job and only service existing debt.

The massively cash-strapped airline had requested government to fund its ongoing operations with over N$2 billion.

“We have not made money available to bail it (Air Namibia) out,” Schlettwein said when asked at a midterm budget review breakfast yesterday.





“If you look at Air Namibia, you have to realise 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,” Schlettwein said.

This situation was further exacerbated by the airline's inability to turn a profit despite interventions to steer it to financial viability, Schlettwein explained.

“The drain on coffers was becoming worse and that was despite two turnaround strategies that were aimed at improving it. 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,” said Schlettwein.

“The N$2 billion we give to Air Namibia will not create a single job, it will just pay debt and perpetuate a situation that is unsustainable… if we give N$2 billion this year, the same question will come to treasury next year, another N$2 billion and maybe another N$3 billion,” the finance minister said.

Since 1998, the airline received N$6 billion in bailouts, the Institute for Public Policy and Research (IPPR) reported in 2017.

Schlettwein explained that Namibia had implemented an open skies policy, allowing other airlines to fly into and out of Namibia, which opened to competition.

This had made it easier to connect to major hubs internationally through other airlines.

The transport ministry, under which Air Namibia falls, also rejected a proposed N$1.6 billion bailout package in August this year.

Air Namibia's former board chairperson Deidré Sauls-Deckenbrock wrote to the ministry requesting the bailout, saying its rejection could lead to the possible cessation of its operations, The Namibian reported.

The airline also recently faced the prospect of having its flights into and out of South Africa cancelled as a consequence of it not paying its obligations due to Airports Company South Africa.

It also faces a N$400 million lawsuit brought by liquidated aviation company Challenge Air over the lease of a defective plane in 1998.

OGONE TLHAGE

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