N$278m payment for Air Namibia staff

The liquidation of the national airline has created new financial obligations for the state, which still has to pay N$2.5 billion to an American aircraft leaser.

06 May 2021 | Transport

OGONE TLHAGE







WINDHOEK

Government has paid part of N$278 million reserved for ex-gratia payments to staff of defunct Air Namibia, public enterprises minister Leon Jooste confirmed.

The payment forms part of the package given to the defunct airline’s 629 employees following its liquidation.

Namibian Sun understands the payment forms only 33% of money promised to the employees, with the remaining 67% to be paid by end of July.

Air Namibia employees received their last salaries at the end of March. The April ex-gratia payments thus came in handy to staff who were growing increasingly worried about their lives following the abrupt closure of the national airline.

Jooste confirmed that the employees had also gotten severance pay from the airline’s liquidators, Bruni and McLaren, which equates to N$105 million

At a press conference in February, Jooste and finance minister Iipumbu Shiimi announced that the airline’s employees would all receive 12 months’ salary after government had decided to close down the company.

No liability

The public enterprises minister had in February committed government to making the payment on the basis that the state would bear no liability for Air Namibia’s demise.

“We will also explain that Cabinet has approved for the employees to receive ex-gratia payments [payment without admittance of liability] to the value of 12 months’ salary, and that this amount will be disburse over a 12-month period,” Jooste wrote in papers filed to the Business and Intellectual Property Authority.

Prior to its closure, the airline was amongst the top recipients of government bailouts, having received about N$8.4 billion over the last decade.

Previously, Shiimi said Air Namibia has been a loss-making entity since its inception and required substantial amounts of money to bail it out from its intractable debt situation.

The Namibia Airports Company and liquidated Belgian company, Challenge Air, both applied for its liquidation.

The airline’s two leased Airbus A330 have since returned to Leipzig, Germany, for refurbishment, while an additional two Airbus A319 aircraft are currently in Johannesburg for the same purpose.

N$2.5b American bill

Apart from financial obligations towards Air Namibia employees as a result of the liquidation, government also has to pay American company Castlelake a staggering N$2.5 billion over the cancellation of an expensive lease of two Airbus A330 aircraft that had formed part of Air Namibia’s fleet.

Government had agreed to a guarantee worth N$2.5 billion to secure the two aircraft – without an exit clause being included in the contract.

Efforts by Jooste to negotiate for Air Namibia’s exit from the deal – including a trip to USA – yielded nothing.

Unlike other Air Namibia creditors who await their share of the spoils after the courts have wrapped up the liquidation, Castlelake expect their money directly from government, which acted as a guarantor to the loan.

Jooste told Namibian Sun last month that negotiations were underway with the Americans on how to structure the payment terms.

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