After the President of Namibia called for liquidation of the country’s national airline, the Finance Minister is weighing up options for Air Namibia. With piles of debt and a frustrated government, what are Air Namibia’s options?
Is Air Namibia heading into liquidation?
Some may say that liquidation has been a long time coming for Air Namibia, who has struggled to make profits and is ten years late on posting any financial results. On June 4th, the President of Namibia called for the liquidation of the airline, saying that it could not continue to bail out the loss-making airline.
This leaves the carrier in a precarious position. Its future hangs in the balance, but ministers are now debating its future. Though liquidation looks like the President’s choice, there might still be hope for the airline.
That said, no information about future strategies have been shared with the public. We contacted Namibia’s Minister of Public Enterprise to find out more, but it was unable to respond at the time of publication. The government is said to be interested in keeping a more condensed Air Namibia afloat while remaining conscious of other public commitments.
According to Reuters, a minister said,
“…resources are needed for other priorities such as health, education, housing, and sanitation, etc. during these difficult times.”
So, what are Air Namibia’s options?
Could it secure private investment?
At present, there is no suggestion that Air Namibia will be available for private investment. That said, this is not a new strategy. Back in 2019, the airline was circulated for independent buyers to remove Air Namibia from full state ownership. At the time, Lufthansa, South African Airways, and Ethiopian Airlines were said to be interested in the airline. For three major airlines to show interest demonstrates that Air Namibia had some appeal and business potential.
That said, nothing came of those initial talks. Is investing in Air Namibia still an attractive proposition?
Well, for everything that it’s not doing perfectly, the airline does have some benefits. Namely, it operates to popular destinations, from Africa to Europe, including Cape Town and Frankfurt out of its hub at Hosea Kutako International Airport in Windhoek. Its route network presents exciting potential for an investor willing to capitalize. Many other foreign carriers, like KLM, also operate to Windhoek, making a strengthened Air Namibia effective competition.
However, investment in the airline does come with significant debt. It currently owes US$295m and will need nearly US$500m to make it to the end of the financial year. A key issue with the airline lies in its administration. It hasn’t posted financial results for over a decade, meaning that it’s at risk of rejections for bank loans, and there is little confidence in what it has and hasn’t achieved.
Is state intervention possible?
Air Namibia has not made any money for its government and key stakeholders. Without financial records, it’s swallowed US$540m of state aid and has nothing concrete to show for it, other than the retention of local jobs.
Despite that, it’s saving grace is that it’s Namibia’s only airline. The country had always hoped to use the air carrier to bolster tourism. This is still a dream that could be realized – if done in the right way. However, with so much foreign involvement in Namibia, without a strong strategy, Air Namibia risks being flushed out of its own country.
Do you think Air Namibia will be saved? Let us know your thoughts in the comments.