Airline collapse: It’s goodbye from broke Air Namibia
Neighbouring state carrier Air Namibia has announced it terminated operations on 11 February and will be entering voluntary liquidation.
Like many other airlines across the globe, the carrier has become a casualty of the crisis in the aviation sector, brought on by the tough economic conditions ushered in by COVID-19.
The airline hit financial difficulty years ago due to mounting debts that could no longer be serviced. With reduced demand for flights, and being unable to operate a proper flight schedule during the pandemic, Air Namibia has not been able to earn enough revenue to cover operating costs.
HARD TIMES FOR AIR NAMIBIA
Like South Africa’s national carrier, Air Namibia has struggled for years to become profitable, and relied on government bailouts for more than 10 years.
Namibia’s government has pumped large sums of state funds into its national airline. It is estimated the airline requires additional funding of 7 billion Namibian dollars (R7bn) for another bailout.
The Pointsguy reports that Namibian Finance Minister Ipumbu Shiimi said his government had spent about 8.4 billion Namibian dollars (R8.4bn) on the airline over the last decade and that another bailout would not be possible.
HISTORICAL DEBTS WEIGH AIR NAMIBIA DOWN
Air Namibia managed to avoid liquidation proceedings in January after reaching an out-of-court settlement of €9.9m with aircraft lessor ChallengeAir, but it was a case of too little too late.
The airline owed ChallengeAir 253-million Namibian Dollars (R253m) for a Boeing 767 it had leased more than 20 years ago.
The board of Air Namibia resigned on 3 February over disagreements regarding the earlier agreement to settle the ChallengeAir debt instead of filing for liquidation.
“The net economic costs of Air Namibia’s operations far outstrip the net gains and it is thus unsustainable,” Namibia’s Ministry of Finance said, as quoted by News24.
AIR NAMIBIA ENTERS VOLUNTARY LIQUIDATION
Subsequently, the Namibian government has indicated it will no longer provide funding to the national airline. As its sole shareholder, the Namibian government has decided that the airline must be liquidated.
“All efforts must be made to protect the assets of the company,” the ministry said.
The company will enter voluntary liquidation in an effort to protect its assets. This is a wise move, which comes at a crucial time. Perhaps the South African government should follow Namibia’s lead before starting up another cash-guzzling national carrier.
“The country’s economy can no longer afford to perpetually provide financial support to Air Namibia at the expense of supporting economic growth and critical social services,” the financial ministry said, as quoted by News24.
REFUNDS FOR UNUSED TICKETS
Travellers with tickets for Air Namibia flights may claim refunds by registering a claim for a refund to refunds@airnamibia.aero
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