Namibia: A Future Up in the Air

Almost every five years, Air Namibia has been repositioning itself, with new strategic plans aimed at revamping the national airline and turning it into a profitable enterprise. The fact of the matter is that Air Namibia has in the past committed many errors in judgement, especially when it comes to profitable route selection.

Industry experts have often alluded that some of these routes appeared to have been purely politically motivated instead of focusing on generating the much-needed revenue. This is evident from the fact that 15 out of the 19 routes Air Namibia was operating in 2019 were unprofitable, among others, due to high structural and operating costs.

The highest loss-making route was the Frankfurt one, which incurred major losses due to high fixed costs and underutilisation. However, attempts to resuscitate the beleaguered airline have often ended in blame shifting and unrealised business targets. This has resulted in N$8.4 billion taxpayers’ money being used to bail out the airline over the last ten years.

Air Namibia’s creditors have also been circling around the cash-strapped airline for years, while service providers have been seeking millions for unpaid services, which have been mostly attributed to historical debt.

There have been proposals, among others, to voluntarily close down the airline and negotiate exit lease agreements and transfer the airline to the public enterprises’ ministry. A new business plan that would need N$4.1 billion was also recommended in the past, while another offer was to liquidate the airline with government assuming liability of about N$2.5 billion. Not any of these worked out.

The outgoing Air Namibia board which threw in the towel this week claimed government has created the impression that N$7 billion was needed to restart the airline. It must be said that the Air Namibia dilemma is not only rooted in operational deficiencies, but also poor strategic and policy implementation. The airline has struggled to stick to a vision, which would have enabled it to be run on sound business principles.

The changing and chopping of the board and executive officers has also created more uncertainty, leading to unreliable operations. It is no wonder the airline has had 11 CEOs in the last 30 years. Unbelievable!

It now remains to be seen whether the shareholder will accede and support the implementation of a new re-start plan devised by the now former board to turn Air Namibia into a very lean and cost-effective airline, with a focus on profitable routes without the airline being an undue burden on the financial resources of government.

The airline industry is at the moment hard hit by the Covid-19 pandemic although an eventual recovery could be boosted by the rolling out of vaccines, with nations hoping to achieve herd immunity against coronavirus in the not-so-distant future.

For Air Namibia, the re-start strategy would be crucial if it still wants to carry the spirit of the nation and safeguard over 600 jobs. The shareholder will also have to carefully evaluate the business plan to allow the current regime to map out a potential recovery, taking into consideration increasing competition and high-fixed operational costs, which have certainly also contributed to the instability of the airline.