Frozen funds wreak havoc on Air Namibia operations

Discussion in 'News & Announcements' started by NamStay, Jun 12, 2019.

  1. NamStay

    NamStay AH Fanatic

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    Source: https://neweralive.na/posts/frozen-...ancelled-joburg-and-cape-town-flights-reduced



    Frozen funds wreak havoc on Air Namibia operations… Flights to Luanda cancelled, Joburg and Cape Town flights reduced

    WINDHOEK – The ongoing court case against Air Namibia by now defunct European-based Challenge Air, which is demanding N$400 million, continues to wreak havoc on the national airline’s liquidity to the extent that it is affecting regional and domestic flights and frustrating domestic travellers.

    The legal case between the two entities stems from a March 1998 sublease agreement that has since seen Air Namibia’s funds frozen in European banks, leaving the national airline with no option but to cancel and scale down on regional and domestic flights.

    The dire situation at Air Namibia was confirmed by its spokesman, Paul Nakawa, yesterday. “Due to the ongoing court case by Challenge Air, Air Namibia’s funds have been frozen in Europe and this has caused a severe liquidity problem at the airline,” Nakawa stated.

    However, he noted that he would have to speak to Air Namibia’s legal team regarding progress made in the drawn-out legal battle.

    The lack of liquidity has left Air Namibia at pains to service its operational obligations, with a number of regional and domestic routes bearing the brunt of the empty coffers, often leaving passengers frustrated and stranded.

    A document seen by New Era confirms that as of June 3, 2019, Air Namibia suspended all flights to Luanda, while flights from Windhoek to Johannesburg have been scaled down one per day from the usual three per day. In addition, Windhoek to Cape Town flights will reduce by one, leaving two flights per day remaining on this route to be operated by an Embraer ERJ and one flight using an Airbus A319 going via Walvis Bay.

    In the confidential document, sent from Air Namibia’s Interim CEO, Xavier Masule, to Executive Director in the Ministry of Works and Transport, Willem Goeiemann, Masule emphasised that the risk associated with the new arrangement is that the entire regional operation could be in jeopardy if any one of the aircraft develops a technical problem.

    “The further risk relates to the fact that SAAT (South African Airways Technical) is the maintenance services provider on this fleet, and they might not be in a position to attend to the aircraft (as is the case with our other A319 aircraft).

    “During April 2019, a payment of N$19 million was made to SAAT, a further N$6.9 million will be paid to them by 31 May 2019. SAAT will be in a position to re-consider and allow provision of required services if we make another substantial payment for minimum N$20 million with commitment on how the balance will be settled,” read Masule’s letter.

    In fact, the number of serviceable Airbus A319 aircraft in Air Namibia’s fleet was reduced to one aircraft as of Monday, June 3 out of a total of four aircraft. The three aircraft which are not in service are undergoing mandatory maintenance checks but will only be released if Air Namibia can come up with millions of dollars for work completed.

    One Airbus A319 was reportedly undergoing a heavy scheduled maintenance check with SAAT, which was scheduled to be completed by June 7. However, SAAT indicated that once the work is done, the aircraft will not be released pending settlement of the account.

    Another Airbus A319 is currently in Cyprus, where the maintenance work was completed but this aircraft was also held until after Air Namibia paid N$5.1 million for the work done. Once that aircraft is released from Cyprus it was to be flown to Johannesburg for an engine change to be done by SAAT before being able to resume commercial flights. Again, SAAT indicated they would not perform the required work prior to the maintenance account status being cleared.

    The third Airbus A319 was also due to undergo a maintenance check from June 3 and had to be grounded on that day. SAAT again indicated that it will not accept the aircraft in their hangar for maintenance while Air Namibia’s account was not cleared.
     

  2. CAustin

    CAustin AH ENABLER BRONZE SUPPORTER AH Ambassador

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    Sounds like the end of the line for this airline unless the government comes up with the money!
     

  3. BRICKBURN

    BRICKBURN AH ENABLER SUPER MODERATOR CONTRIBUTOR LIFETIME TITANIUM BENEFACTOR AH Ambassador

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    Air Zimbabwe revisited.
     
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  4. Spooksar

    Spooksar AH Fanatic

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    Sad to see options for flights to Namibia are less and less, that may mean a increase in pricing on the flights that are still operational. South African airlines is in trouble also, not good
     

  5. ack

    ack AH Enthusiast

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    Hell fire !
     

  6. NamStay

    NamStay AH Fanatic

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    Source: https://www.namibian.com.na/79527/read/Air-Namibia-to-get-planes-back


    Air Namibia to get planes back

    PUBLIC enterprises minister Leon Jooste says half of the millions of dollars that Air Namibia needs to get its aircraft back have been paid, and the Airbus planes should be returned as from tomorrow.


    He said this on the sidelines of a press conference held on Tuesday at the ministry's head office in Windhoek.

    The Namibian reported that three of the airline's four Airbus A319 planes for its regional routes were under maintenance, and could not be released until payment was made.

    The airline's spokesperson, Paul Nakawa, had said although the airline had the money, they could not make any payment as their accounts are frozen due to a pending court case in Belgium.

    He added that if they could not get the planes from the maintenance company, it might have threatened their regional routes' schedules if the single Airbus plane currently operating developed technical difficulties.

    Jooste said from the budget of N$500 million for the airline, over N$50 million has been released to them, and the money should reflect by tomorrow.

    He said the Airbus A319 in Cyprus has been serviced, and will soon be back in Namibia.

    GROUND HANDLING

    The Namibia Airports Company on Tuesday announced that it had decided not to renew the ground handling agreement that they have with Air Namibia, and also gave the airline until November to pay the reportedly N$200 million owed to them in various fees.

    Although NAC spokesperson Dan Kamati declined to comment on the issue, citing confidentiality, Nakawa yesterday confirmed that the airline had received the letter written by Bisey /Uirab, the NAC's boss, on 22 May 2019.

    Nakawa said they viewed the message in the letter in a positive light because a client is always expected to air their dissatisfaction, if there is any.

    “However, we think this is not final. We hope that he will still give us an audience to discuss and find a lasting solution, which is to the benefit of all parties.

    “Otherwise, if we are not given a second chance to continue with the ground handling services, it will be difficult to keep a workforce of almost 100 employees in our employment who are working at the airport,” added Nakawa.

    Jooste also commented on the issue, saying Air Namibia owes NAC a lot of money, which has been compromising the airport company's operations.

    The ministry's deputy executive director, Luisa Shixuameni, who was also at the press conference, pointed out that it would not be a problem for NAC to find another entity for the ground handling task as there are airlines and companies both locally and abroad which are qualified to do so.
     
    Last edited by a moderator: Jun 13, 2019

  7. NamStay

    NamStay AH Fanatic

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    Source: https://www.namibian.com.na/79473/read/Air-Namibia-in-steep-descent


    Air Namibia in steep descent

    THE Cabinet committee on policy is examining the idea of liquidating Air Namibia as the ailing parastatal continues its descent into a financial sinkhole.


    Public enterprises minister Leon Jooste revealed this at a press conference in Windhoek yesterday.

    He said Air Namibia had been a topic of discussion since last week after the Cabinet committee on public enterprises was tasked with appointing a consultant to evaluate the airline's feasibility.

    The consultant was supposed to come up with a proposal on how the airline could reach break-even status in the next three years.

    “This report gave us a more accurate picture of the various realities surrounding Air Namibia, and what may be required to restore the commercial viability of our airline. [...] One of the options is liquidating Air Namibia,” the minister said.

    According to Jooste, the other options include leaving Air Namibia as it is, or optimising it.

    This discussion comes on the heels of recent revelations that Air Namibia is experiencing a shortage of aircraft due to outstanding accounts with their maintenance company.

    The Namibian reported on Monday that the parastatal had to suspend a number of regional flights due to the unavailability of three Airbus planes, which cannot be released until the airline's outstanding account with South African Airways Technical (SAAT) is settled.

    It was revealed in a memorandum from the airline's interim chief executive officer, Xavier Masule, to works executive director Willem Goeiemann that Air Namibia was in a financial sinkhole and needed N$20 million to settle an outstanding payment to SAAT.

    The letter was sent on 29 May 2019.

    “The information shared herein is for noting, and also seeking assistance to the speedy facilitation of payment of a further N$20 million towards SAAT during the first week of June 2019,” he wrote.

    According to Masule, SAAT had indicated that they would not release, perform the required maintenance work, or accept any Air Namibia aircraft into their hangars until the company's account was settled.

    Approached on the matter earlier this week, Jooste said an appeal had been made to the finance ministry last week for payment to get the aircraft back. However, he said the funds will be part of the airline's budget.

    The Namibian has previously reported that the heavily subsidised parastatal has continued to sink into a financial quagmire, to the extent that banks were refusing to grant it credit to fund day-to-day operations.

    An article carried by The Namibian in 2018 detailed that the national airline was allocated N$695 million in the 2016/17 budget year, received N$486 million from the government during the 2017/18 financial year, and was projected to receive N$493,9 million in 2018/19 and N$497,7 million in the 2019/20 fiscal year.

    A March 2019 article by the newspaper on this year's national budget detailed that nearly half of the N$1,08 billion in government funding set aside for state-owned enterprises – just short of N$500 million – was destined for the loss-making airline.

    Documents show that the airline received N$740 million during the 2018/19 budget, which is much higher than was initially projected.

    Other reports show that Air Namibia has received financial bailouts of N$5,5 billion from the government over the past 10 financial years, from 2010/11 to 2019/20 (projected).

    Earlier this week, the airline's spokesperson, Paul Nakawa, confirmed that they are struggling to get the aircraft back because their accounts are frozen, adding that they are in a serious crisis due to an ongoing court case in Belgium.

    Air Namibia is fighting liquidated Belgian airline, Challenge Air, in Germany's courts.
     

  8. Newboomer

    Newboomer GOLD SUPPORTER AH Fanatic

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    I wonder if there is any connection of Air Nimibia's and SAA's difficulties to the dissolution of apartheid. Were there problems before the dissolution of apartheid when things were run by whites or is it incompetence on the part of blacks nowadays?
     

  9. sestoppelman

    sestoppelman AH ENABLER AH Ambassador

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    It usually bodes ill when the "govt" gets involved in private enterprise. Like Milton Friedman once said, "if the govt was in charge of the Sahara desert, it would soon run out of sand". Why is it the govts job to bail out business's that fail? Who is govt? The taxpayers.
     

  10. CAustin

    CAustin AH ENABLER BRONZE SUPPORTER AH Ambassador

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    It’s not a private enterprise from my understanding...thus my comment that the government would need to come up with the money!

    Also note the paragraph below which I take directly from the article above.
    “The Cabinet committee” “Public enterprise minister” sure doesn’t sound like private enterprise labels to me!

    THE Cabinet committee on policy is examining the idea of liquidating Air Namibia as the ailing parastatal continues its descent into a financial sinkhole.


    Public enterprises minister Leon Jooste revealed this at a press conference in Windhoek yesterday.

    Just Google Air Namibia and the following comes up.

    Air Namibia (Pty) Limited, which trades as Air Namibia,[3] is the national airline of Namibia,[4] headquartered in Windhoek.[5]It operates scheduled domestic, regional, and international passenger and cargo services, having its international hub in Windhoek Hosea Kutako International Airport and a domestic hub at the smaller Windhoek Eros Airport.
    As of December 2013, the carrier is wholly owned by the Namibian government.[6] Air Namibia is a member of both the International Air Transport Association and the African Airlines Association.
     

  11. sestoppelman

    sestoppelman AH ENABLER AH Ambassador

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    But that sort of makes my other point though doesn't it? Govt involvement equals FUBAR operation.:D
     

  12. johnnyblues

    johnnyblues AH ENABLER AH Ambassador

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    I was in Namibia while this occurred, most people were in disbelief the airline was in trouble.
     

  13. JGRaider

    JGRaider AH Fanatic

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    I wouldn't fly with them again even if they were solvent. Last time we went over we used them coming back from WH leg to J'Burg. It was August and we had our tickets since January. We were there two hours early and there was a rather long line. By the time we got up there they said they didn't have any seats left and we would have to catch the next one. Having our tickets in our hand for months prior made no difference and they wouldn't even talk about it. We took the next flight and only had 1 hour from landing in J'burg to catch our return to ATL. Air Namibia flat out sucks and always has.
     

  14. Spooksar

    Spooksar AH Fanatic

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    No difference then Delta, every time I’ve flown with Delta they have over booked and are looking for passengers to go on a later flight
     

  15. JGRaider

    JGRaider AH Fanatic

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    There's a big difference in looking for passengers to take a later flight than not allowing a passenger with a ticket in his hand and seat assignment to check in and board the plane. Big difference.
     

  16. Hogpatrol

    Hogpatrol AH ENABLER SILVER SUPPORTER AH Legend

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    Sorry but these airlines that are running on shoestrings, I have to question the maintenance & repair. Are they using duct tape, used hardware and used safety wire? I once saw ty-wraps on an SAA in country flight. Now I've used them on my bug smasher but not on the props. I just hoped they were the 200mph versions. :LOL:
     

  17. Spooksar

    Spooksar AH Fanatic

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    Tell that to the guy that was dragged out of his seat by security to make room for another passenger, a couple of years ago. Not mulch different
     
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  18. JGRaider

    JGRaider AH Fanatic

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    I call BS on that.
     

  19. Spooksar

    Spooksar AH Fanatic

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    It was all over the news
     
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  20. Spooksar

    Spooksar AH Fanatic

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    JGRaider June 10th 2018 on United flight out of Chicago
     

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