Namibia: Govt Throws Air Namibia to the Lions

Air Namibia’s board has pleaded with the government for a N$95 million bailout, but the state appears to have allowed a private company to shut down the airline through the courts.

Air Namibia’s closure could cost the state more than N$2 billion and would affect 644 workers.

The national airline has been on the verge of collapse for years, but the situation has taken a turn for the worse since last year.

Some politicians and their cronies are allegedly ganging up on the national airline to shut it down, a scenario which would give a private airline an advantage in Namibia’s aviation market.

Air Namibia said it wants the N$95 million to pay off a debt from a company called Challenge Air.

The dispute is linked to a March 1998 agreement for Air Namibia to lease a 351-passenger plane – a Boeing 767-300 – from Challenge Air.

Air Namibia terminated the agreement after discovering the aircraft was defective.

Challenge Air was liquidated soon afterwards, but the transaction has continued to haunt Namibia’s national airline.

The government has in the past refused to pay Challenge Air.

In fact, minister of works and transport John Mutorwa said in 2018 that the government will defend a case brought by a Belgian company that is threatening to take over Air Namibia and TransNamib properties because of a disputed N$400 million payment.

But the government started giving in after 2019. Some Air Namibia officials did not want Challenge Air to be paid taxpayers’ money.

Lawyer Sisa Namandje, who represents Challenge Air, wrote to Mutorwa on 11 October 2018, giving the government 10 days to negotiate or face the consequences.

Namandje stated in his letter to Mutorwa that Air Namibia and TransNamib failed to pay the N$400 million to Challenge Air as required by court judgements in France in 2011 and Germany in 2015.

Namandje represents business people Wilhelm Shali and Anicet Baum, who represent the Belgian company. Shali is the main shareholder in Shali Group Namibia, while Baum is a Belgian lawyer.

A settlement agreement with Air Namibia was reached in December 2019, in which the airline acknowledged it owed Challenge Air around N$333 million and undertook to pay that sum in monthly instalments until September 2020.

By April 2020 Air Namibia repaid about N$150 million at the time, and then stopped paying.

Baum is asking the High Court to order the shutdown of Air Namibia as a result of money the national airline owes Challenge Air, which has been declared bankrupt.

Baum is charging that Air Namibia has admitted it is unable to pay its debt to Challenge Air and is therefore commercially insolvent.

JUDGEMENT DAY

The High Court is expected to announce today whether Air Namibia would shut down.

The legal onslaught against the national airline comes six months after the Cabinet decided to close down Air Namibia.

Sources familiar with Cabinet decisions said this was decided on 12 August 2020.

“The Cabinet approved that Air Namibia be liquidated,” a recommendation from that meeting said.

Another recommendation was that Air Namibia’s 644 workers be paid for 12 months in consultation with the unions.

“Cabinet approves that the minority of public enterprises be mandated through the Cabinet committee on treasury to appoint a technical expert in the aviation industry to advise the government on renegotiating terms of the A330,” the resolution said.

President Hage Geingob has in the past said the national airline would be shut down.

“Air Namibia must be liquidated . . . It is not making any profits and it is just being bailed out,” Geingob said in parliament last year.

Yet, the government has allowed a group of Namibians and their Belgian lawyer to demand a payment that dates back 20 years.

State House spokesperson Alfredo Hengari declined to comment on the matter ahead of today’s court case.

BEGGING BOWL

Air Namibia’s board chairperson, Escher Luanda, refused to comment on the matter yesterday.

He wrote to minister of public enterprises Leon Jooste on Wednesday pleading for the government to rescue the company.

He said the company owes Challenge Air around N$173 million, but around N$95 million is outstanding.

Challenge Air appears to be hell-bent on getting every cent from Air Namibia’s payment agreement.

The national airline said it consulted Jooste on 21 January.

They discussed the possibility of a government bailout to settle the Challenge Air payment.

“The shareholder (government) indicated that the contingency budget was exhausted and hence could not source any funds prior to the end of the financial year,” Luanda said.

He warned that the airline would be placed in the hands of liquidators if the government fails to chip in.

This, he said, would imply that neither the board nor the shareholder shall have any powers over the affairs of the organisation.

“The liquidation can be very complex and protracted and only serve to frustrate all the stakeholders. This could take up to five years,” he said.

According to him, the liquidation would trigger cross-defaults on debts owed by Air Namibia.

“Air Namibia has a workforce of 644 employees, all of whom will lose their jobs,” he said.

Luanda said Air Namibia would lose several key licences with international agencies.

“The liquidation would erode any possible value in the airline’s assets, with the six aircraft and the head building having to be auctioned at negligible amounts of as little as 20%,” he said.

Luanda said all the bilateral air services agreements entered into between Air Namibia and countries into which Air Namibia flies, would be terminated.

DENIAL

Jooste yesterday denied the allegations that the government was preparing for another airline.

“I can confirm that neither I nor the Cabinet committee on treasury have had any discussions, or are aware that Westair has offered to buy Air Namibia’s aircraft.

“There is a pending court case and I am therefore not at liberty to divulge any additional information,” he said.

Jooste is one of the high-ranking government officials accused of pushing for the parastatal’s closure.

Source:

Leave a Reply

Your email address will not be published. Required fields are marked *