To revive Air Namibia or not – is the question

While the idea of Namibia having a national airline is a beautiful dream, one needs to first go over how and why the airline was liquidated in the first place. Not only that but what it would take to revive the airline and how much the taxpayer would have to fork out to have it up in the skies again.

By Wonder Guchu

The discussion about reviving Air Namibia has unsurprisingly returned with the new administration after about four years.

While the idea of Namibia having a national airline is a beautiful dream, one needs to first go over how and why the airline was liquidated in the first place.

Not only that but what it would take to revive the airline and how much the taxpayer would have to fork out to have it up in the skies again.

Political, economic, and natural realities are at play whenever discussing the revival of Air Namibia or any other major project.

The political reality is about emotions that are blind to the stark circumstances and the impossibilities of pushing ahead with a significant project.

Economic reality considers resource availabilities and market possibilities, especially now that the skies are saturated with other well-funded and properly managed airlines.

The natural reality pertains to how we interpret the world around us and resolve challenges.

In the debate about reviving Air Namibia, the politician does not consider natural reality.

Although they may be aware of the economic reality, the politicians would choose to plough ahead with grandiose ideas to score marks.

Works and transport minister Veikko Nekundi

Political reality

With a new works minister Veikko Nekundi in office, talking about reviving Air Namibia seems to be the most logical thing to do.

Even for Namibia, it is a matter of pride for a national airline since other countries in the region have seemingly thriving airlines.

After all, was Air Namibia’s tagline not Carrying the spirit of Namibia? Similarly, that spirit should be carried at whatever cost, and politicians must push for revival at whatever cost.

The irony of the debate on reviving Air Namibia is that the ministers – former finance minister Ipumbu Shiimi and former public enterprises minister Leon Jooste – both Swapo Party members pushed for the liquidation of airline and now other Swapo ministers want the airline back.

The late President Hage Geingob, too, was not so fond of Air Namibia because of the costs involved.

In June 2020, for example, Geingob said the airline should be liquidated, and a few days later, Air Namibia grounded all its 10 aircraft indefinitely.

Air Namibia had a fleet of the A330s leased for about N$15 million monthly.

Geingob said: We have a serious problem with Air Namibia. It must be restructured. It is not making any profits and is just being bailed out. We must do something about it.

The Cabinet Committee on Overall Policies and Priorities had also agreed that the airline should be liquidated.

The airline was later liquidated in early February 2021.

In most cases, if not all, political realities bring massive confusion, even when the actors are from the same party.

The confusion shows a lack of reason as to why something must happen but that it must happen by force and fire to massage egos.

Spiritual teacher and author Eckhart Tolle says: The ego’s needs are endless. It feels vulnerable and threatened, so it lives in a state of fear and want.

Air Namibia owed several entities, including the Namibia Airports Company and the Namibia Revenue Authority billions of dollars

The economic reality

When egos fear and want, they forget the economic reality, which was why Air Namibia was grounded.

But because every politician fears being seen as doing nothing, they seek validation by bringing up issues to prove others wrong or to be seen as doing something.

When Air Namibia was liquidated, its assets were valued at N$1,04 billion, and its liabilities were nearly N$5,4 billion.

The airline owed NamRa N$800 million, the Namibia Airports Company N$708 million, N$105 million owed to 630 employees, about N$410 million owed to Bank Windhoek, N$133 million in tickets sold before the liquidation and about N$76 million owed to the Namibia Civil Aviation Authority.

Additionally, Air Namibia owed the aircraft engine manufacturer Rolls-Royce about N$150 million, the law firm Herfurth & Partner N$145 million, N$91 million to the technical division of German airline Lufthansa, and N$38 million to the International Air Transport Association.

Available records show that Air Namibia owned two Airbus A319 aircraft valued at about N$555 million and four Embraer aircraft, with a combined value of nearly N$90 million.

The airline signed a 12-year lease with Castlelake for two A330-200s in 2013. To return the aircraft required Air Namibia to pay N$2,5 billion.

Liquidating Air Namibia required another N$2 billion.

One has to factor in the Challenge Air 1998 deal over the Boeing 767-300, which required Air Namibia to settle N$253 million in December 2019.

Air Namibia agreed to pay in instalments but never got to pay the whole amount, leaving about N$161 million.

In March 2022, Challenge Air’s lawyers sought money from TransNamib because the two entities once belonged to the same holding company.

The natural reality

The natural reality is that the circumstances may allow the politician to proceed with the Air Namibia revival plans because that makes sense.

Usually, natural realities do not consider that between 1999 and 2019, Air Namibia received N$8.3 billion in bailouts from the government and nursed a historic debt of N$1.3 billion.

Natural realities will also not consider that Air Namibia never paid a dividend to the government in more than 29 years of each existence.

Neither does it matter that the airline needed N$8 billion to carry on as a going concern before it was liquidated.

Natural realities will also not consider the gross mismanagement that saw Air Namibia led by 11 CEOs in 30 years and underwent several failed turnaround strategies.

While it is unclear in what form and under what management the revived airline will be, logic dictates that if it required N$8 billion for the liquidated Air Namibia to go as a going concern, the cost of getting it back might be higher.

Naturally, the high costs and the competition have seen Fly Namibia taking up Air Namibia’s routes.

Some might say the revived airline could be cheaper and affordable since it will be government-funded, but is that not why Air Namibia ran losses in the first place?

Ethiopian Airlines has been flying for more than 70 years

Is it doable?

Ethiopian Airlines started flying in April 1946. Today, Ethiopian Airlines flies to about 150 destinations and has a fleet of 135 aircraft.

In an interview with the BBC in 2017, the former Ethiopian Group CEO, Ato Tewolde Gebremariam, said the government owns the airline, but professional aviation experts run it.

Gebremariam said: All of us have grown in the airline. I started as a checking agent at the counter in an airport, 32 years in the same industry.

Mesfin Tasew, appointed as Group Chief Executive Officer of Ethiopian Airlines in March 2022, joined the airline in 1984 as an associate engineer and served in supervisorial and managerial positions in the Aircraft Maintenance and Engineering areas.

Tasew became director of Operations & Technical Systems Support and Chief Information Officer in 1997 before becoming the vice president of Maintenance and Engineering in 2006.

So, can Namibia do it?

Yes, provided the past mistakes are avoided, the airline is left to professionals to run without political interference.

Yes, Namibia can succeed if the idea to revive Air Namibia is purely economic rather than scoring political points.

*Wonder Guchu is Namibia Future Media Holdings manager for news.