The Namibian government has struck a deal with an American lessor to reduce the N$2.5 billion ($167.8 million) debt owed by former national flag carrier Air Namibia. The debt stems from the inability of Air Namibia to honor a lease agreement made with American aircraft lessor Castlelake. Due to the airline’s failure, Air Namibia prematurely canceled a deal it had in place with Castlelake for two Airbus A330-200s.
Namibia Minister of Public Enterprises Leon Jooste says that the government has struck a deal with Minneapolis-headquartered aircraft lessor Castlelake. Mr. Jooste, however, could not put a final number on how much the government would pay, but he did reveal that they are in the final stages of the agreement.
A deal is in the final stages
According to the countries largest daily newspaper, The Namibian, when speaking about the agreement yesterday, Mr. Jooste said,
“We have been negotiating with the lessor for several weeks and will finalize the lease termination agreement soon.”
The lease agreement with Castlelake that Air Namibia had shows that the Windhoek Hosea Kutako International Airport (WDH)-based airline had to pay around N$16 million (1.7million) per month for each aircraft. On February 11, 2021, Air Namibia ceased operations and grounded all of its aircraft in preparation for liquidation.
When talking about Air Namibias’ former employees, the minister said that the government had already paid out N$139 in salaries to more than 600 airline workers. Air Namibia employees will now receive the second half of the N$278 severance package in July.
Mr. Jooste maintained that all former Air Namibia would receive the severance package agreed by the government, saying:
“The N$278 million is paid in two installments. Half has been paid.”
In response to claims that some workers were yet to receive compensation, Mr. Jooste said it was down to the airline’s liquidators Ian McLaren and David Bruni, to distribute the payments and not the government.
Air Namibia was a state-owned airline
As the sole owner of the airline, the government decided under the terms of the countries Companies Act to voluntarily wind up the airline and liquidate its assets by passing a special resolution on February 22, 2021.
The special resolution was then registered with the Namibian Business and Intellectual Property Authority (BIPA) on February 24, and the winding up of the airline was confirmed on March 26, 2021. According to a statement filed with BIPA, Air Namibia’s assets were worth N$1.4 billion. Its liabilities, however, were much greater, weighing in at close to N$5.4 billion.
The statement also showed that Air Namibia’s biggest liability was the N$2.5 billion it owed to Castelake for a 12-year lease on the two Airbus A330-200s.
Air Namibia acquired the two Airbus A330-200s on a 12-year lease in 2013 as replacement aircraft for its two Airbus A340-300s. It planned to use the more fuel-efficient widebody jets to upgrade the airline’s long-haul offerings. Unfortunately for Air Namibia, governments do not know how to run airlines, and it did not take long before the arrival of foreign carriers offered an alternative to Air Namibia.
While deciding to pull the plug on Air Namibia was the right thing for the government to do, it will come as a surprise if we ever find out how much they agreed to pay Castlelake.
What do you think about Air Namibia and the reason why it failed? Please tell us your thoughts in the comments.