Air Namibia Grounded Following Cash Crisis

Air Namibia will be grounded from midnight tonight after failing to secure sufficient funding to stay afloat. The situation has resulted in its license becoming void and prohibiting it from operating commercial flights.

Air Namibia 737
Air Namibia will be grounded from Wednesday. Photo: Bob Adams via Flickr

Air Namibia commercial flights grounded

As reported today by Reuters, Air Namibia’s aircraft will be grounded from midnight on July 8 after the national carrier only received a tenth of the funding needed to remain solvent. The airline needs around $469 million to keep it afloat, but the amount provided in last month’s budget fell woefully short.

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In a statement, Eldorette Harmse, head of the Transport Commission, said that the funding “is scarcely 12 percent of the amount stated as needed by the management of the airline.”

The voiding of the company’s air license prohibits it from operating commercial flights. However, under its non-scheduled air services license, it will be allowed to operate humanitarian repatriation and evacuation flights. That license remains valid during the coronavirus state of emergency.

Windhoek-based Air Namibia has a workforce of around 800 and a fleet of 10 aircraft. It has been operating busy regional routes to Cape Town, Harare and Luanda, as well as its one intercontinenal route to Frankfurt.

Air Namibia 737
The Namibian government falls short on funding for its cash-strapped airline. Photo: kitmasterbloke via Flickr

Air Namibia’s ongoing cash crisis

The cash-strapped airline’s financial troubles are not entirely related to the COVID-19 pandemic, which brought air travel to a standstill. Under Namibia’s Air Services Act, the company is required to provide financial statements, but it has failed to do so in recent years.

Last June, Simple Flying reported that Air Namibia was being forced to ground its Airbus A319s due to an ongoing court case with the now-defunct Challenge Air. The Belgian-based airline is owed $13.88m and has applied to have Air Namibia liquidated by the Namibian High Court.

In October 2019, the Namibian government turned down a plea for a $137m cash injection. Finance Minister, Calle Schlettwein was quoted as saying,

“If you look at Air Namibia, you have to realize that for the last 29 years, there was not a single year where Air Namibia contributed to the state coffers; it has never made money.”

The government later relented and agreed to provide $35m to enable the airline to service its aircraft.

Last month, the Namibian President, Hage Geinhob, said that the government could not continue to bail out Air Namibia and called for the liquidation of the flag carrier. It has received $540m in state funding and, other than retaining local jobs, has nothing to show for it.

Air Namibia A319
Liquidation may be the only option for Air Namibia. Photo: Bob Adams via Flickr

Is liquidation the only answer?

It would appear that Air Namibia has come to the end of the road. With no more government funding forthcoming and, with the grounding of its fleet, there is nowhere else to go.

The airline has previously been circulated for private ownership and, at the time, Ethiopian Airlines, Lufthansa, and South African Airways showed interest. However, investing in the company would also bring with it significant debt. The financial risk could outweigh any benefits to be gained, such as popular routes in Africa and Europe.