Govt wants to veil Air Namibia, Calle Schlettwein’s document reveals reasons

Namibia's Minister of Public Enterprises, Leon Jooste including other government officials from the transport ministry are in the United States a few days back to negotiate Air Namibia's exit from aircraft lease agreements. Its closure could cost the government an approximate amount of N$2.5 billion.

Leon Jooste and other officials are scheduled to meet the US government tomorrow. A memorandum was submitted to the cabinet committee by Namibia's Finance Minister, Calle Schlettwein two months ago in which he suggested the veiling of Air Namibia.

The confidential document titled 'Non-sustainability of Air Namibia' gives a description of why the airline should be closed. The document shows one of the estimates options that Air Namibia would require N$3.5 billion to continue operating in its current form for three years. The second reason includes a board-supported bailout plan, and would cost between N$2.5 billion and N$3.3 billion.

The third option provided in the document is a new business plan that would need N$4,1 billion, while the fourth is the total closure of the airline, an option recommended by Calle Schlettwein.

"This scenario assumes liquidation of Air Namibia. The government liability of approximately N$2.5 billion under the remaining government guarantee for the lease agreement of the A330s will stand. The scenario is financially the most predictable [N$2.5 billion worse case] and therefore the preferred option," the cabinet document revealed.

Air Namibia underwent severe loss in the last couple of years and this has split the cabinet members on pondering over whether it should be left operating as a public entity, get privatized or shut down. The document also revealed that the government of Namibia invested N$8.3 billion into the airline between 1999 and 2019.

"The company has considered approaching the market for external financing and borrowing against assets. However, this option is not feasible, given the consistent message in the past that banks refuse to advance financing in the absence of audited financial statements, aircraft is an asset class which cannot be converted into cash, and due to low confidence in management capability, given the historic challenges," he said in the document.

Also Read: Drought severely affects Namibia, Sign of almost 'no grass' for livestock