Air Namibia needs over N.dollars 2.5 billion to stop bailouts

19 Sep 2018 15:40pm
WINDHOEK, 19 SEP (NAMPA) – Air Namibia needs between N.dollars 2.5 billion and N.dollars billion 3 billion to acquire capital assets and invest in infrastructure in order to stop relying on Government bailouts.
This is according to the parastatal’s General Manager (GM) for Commercial Services, Xavier Masule, when the national airliner’s management met with the Parliamentary Standing Committee on Economics and Public Administration on Wednesday.
Masule was responding to a question by the committee’s member and leader of the official opposition, McHenry Venaani, who asked how much the organisation would need to become profitable and self-sufficient.
“If you look at the valuation of the airplanes, include the other assets, the infrastructure requirements that we have mentioned; it won’t be a small amount. It will be in the region of N.dollars 2.5 to N.dollars 3 billion,” Masule responded.
Air Namibia needs this money for capital investment and infrastructure development, he added.
He said such an exercise would ease the burden of aircraft ownership cost from operating revenue, strengthen its balance sheet and lay a solid foundation for the future.
According to media reports, Air Namibia has received in excess N.dollars 6 billion in Government bailouts since 2000.
This has seen the airliner fall prey to critics, who say it is a bottomless pit and a waste of taxpayers’ money.
However, the manager attributed this to Air Namibia’s “weak” business model on which it was founded - which has made the entity prone to subsidies to stay afloat.
One such example is Government’s failure as the shareholder to purchase aircrafts, instead opting to rent them.
At present, Air Namibia operates its six domestic and 11 international routes with a fleet of 10 aircraft.
This includes two Airbus A330s, four Airbus A319s and four Embraer 135s.
To take full ownership of the two Airbus A319s it is renting, Air Namibia will have to pay anything between N.dollars 366 million and N.dollars 396 million. For the two A330s, the airliner needs to cough up at least N.dollars 1 billion.
“The amount our government spent for the rental of aeroplanes is more than it would have cost to purchase them,” Masule said.
(NAMPA)
MEM/HP/PS