Africa

Like South Africa, Like Namibia: Another National Airline Hits Rock Bottom


July 9, 2020

The never-ending woes of South Africa’s national carrier, South African Airways (SAA), is no news. The fresh gist, however, is that another national airline in the same sub-region has joined the same unenviable company made up of carriers that are close to biting the dust.

Namibia’s national carrier, Air Namibia, has been grounded amid mounting debt and crippling insolvency. The cash-strapped airline failed to secure sufficient funding to remain solvent and its air license has been voided by the country’s transport authority.

With the suspension of its air license, the carrier is banned from operating commercial flights, though it is still permitted to undertake humanitarian evacuation and repatriation flights under its non-scheduled air services license. 

With the pandemic still wreaking havoc, a State of Emergency has been declared and the carrier non-scheduled air services remain valid for the duration of the declaration.

Although air travel and tourism were crippled by the movement restrictions that were triggered by the virus, Air Namibia’s troubles have been evident long before now.

Apart from failing to deliver financial statements in recent years (a violation of Namibia’s Air Services Act), the national carrier was in the news for all the wrong reasons in January. That was when a scathing audit report by Lufthansa alleged serious shortcomings around safety, operations, and finances within Air Namibia.

Apparently, those issues remain unresolved. As part of its worrying debt profile, Air Namibia still owes its main creditor, ChallengeAir SA, USD 13.88 Mn. The now-defunct Belgian company has since applied to the Namibian High Court to have the carrier liquidated.

With a staff of close to nearly 800, the carrier operates busy regional routes to Cape Town, Luanda, and Harare, as well as a Windhoek-Frankfurt route. In last month’s budget, the amount allocated to the national carrier was only a tenth of the USD 469 Mn needed to keep it afloat.

The problems with Air Namibia bear a startling resemblance to that of SAA, the national carrier in neighbouring South Africa, which has been struggling with debt and toying with job cuts.

Once the jewel in the crown of African national carriers and still among the top carriers nonetheless, the airline has struggled alarmingly.

SAA is in trouble because it has been accumulating debt at levels higher than what it can sustain. It has topped USD 3.9 Bn in debt since 1994, last making its profit as far back as 2011.

In the past decade, over USD 946 Mn in taxpayer money was spent on bailouts for the airline. As though that was not disturbing enough, the country’s government committed to settling more than USD 516 Mn in debts that SAA has been unable to repay. This is equivalent to more than ZAR 5 K (USD 286.99) per registered individual taxpayer in South Africa.

Determined to keep the carrier flying, the South African government recently stepped in yet again, agreeing to fund a restructuring of SAA if a business rescue plan for the struggling state-owned airline is drawn up and followed.

The administrators running the embattled carrier had proposed that the government provide USD 1.2 Bn in the bailout to enable it to repay debt and resume operations. However, it is uncertain whether the latest proposed bailout would turn things around.

Featured Image Courtesy: AnnaAero

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