THE END – Air Namibia shutdown to cost billions

CHARMAINE NGATJIHEUE, TIMO SHIHEPO and SHINOVENE IMMANUEL THE government will spend around N$300 million to pay salaries of Air Namibia employees who will stay at home while the 74-year-old airline is shut down.

The closure of the national airline marks the end of an institution that has gobbled up N$11 billion in government bailouts over the past two decades.

Sources told that Air Namibia’s monthly wage bill is between N$25 million and N$30 million.

Air Namibia has been on death row for the past three years, but its fall from grace was reinforced this week when the Cabinet was briefed that last year’s decision to liquidate the airline will prevail.

Ministers have reportedly been debating on whether the Cabinet should stick to the liquidation decision.

“The answer to that is that liquidation still stands,” a source familiar with the Cabinet discussion said.

The national airline’s troubles have been long-coming.

And they involve politicians and executives who often used Air Namibia as a cash cow.

President Hage Geingob has for years supported the airline.

In October 1999, Geingob – as prime minister– welcomed Air Namibia’s brand new Boeing 747-400, which cost around N$700 million.

That deal was clouded with allegations of bribery and signalled continued support from the government.

In fact, the government agreed to pay an additional N$2 billion to Air Namibia from 2001 to 2002.

Minister of finance Iipumbu Shiimi said the Cabinet has decided that it is in the best interest of the country to file for voluntary liquidation.

He said the airline has not been profitable since its inception.

Speaking at a press conference yesterday, Shiimi said the government spent billions of dollars to support the airline, but cannot keep sustaining it at the expense of other pertinent issues, such as economic growth and social services.

“It must be noted that the government considered all other options . . ,” he said.

Shiimi said the liquidation of the airline would cost N$2 billion.

He said liquidation costs are not always the responsibility of the shareholder, but funds may be generated by selling the company’s assets.

Air Namibia’s assets at book value stood at N$981 million as at August 2020, while the airline’s liabilities stood at N$3 billion over the review period.

Shiimi said the government has committed to paying employees’ salaries for 12 months.

It will also consult the temporary board on the winding up of operations.

“That includes the schedule of payments to the employees and the protection of assets,” Shiimi said.

Shiimi denied information that the government wants to close Air Namibia to advance another airline.

He said: “This information is totally misleading and devoid of any truth. The history of Air Namibia is well known and the government can no longer carry this burden, given Air Namibia’s soaring debts.”

He said the government has to date spent N$11 billion on the struggling airline.

Jooste corroborated Shiimi’s sentiments on the government not promoting the growth of another airline, but said the liquidation decision was already in the pipeline.

“The discussions that we have had leading up to the conclusion we have reached, were done quite a considerable time ago already. So, there were obviously a number of issues that needed to be resolved. One of them had been a very complicated issue of the lease agreements we have on the two Airbus aircraft, and the fact that they are fully backed by a government guarantee,” Jooste said.