Tuesday, February 19, 2013

■ NAMIBIA: Tourism sector jittery as Government, Air Namibia remain mute on the latter's new business plan.

Air NamibiaContrary to the old adage that "No news is good news", the silence emanating from Windhoek regarding Air Namibia's (SW) new business plan, pitched to its sole shareholder, the Namibian Government, late last week, is starting to unsettle players in Namibia's tourism industry, already hit by the Eurozone crisis.

Air Namibia
Air Namibia (Embraer)
The Namibian national carrier's board was due to present its controversial revised business rescue plan to the Cabinet treasury committee on Thursday last week following weeks of speculation about the state of the airline's finances.

Air Namibia board chairman Harald Schmidt said that a new rescue strategy had to be devised after Government was forced to inject a further USD28.9million (NAD257million) on top of SW's previously allocated USD92million (NAD822million). Namibian Finance Permanent Secretary Ericah Shafudah said the airline will receive an amount of N$164 million during the 2013/2014 book year, which starts on 1 April 2013.
"The fixed monthly operational expenses had surpassed the business plan projections to such a serious extent that the shareholder instructed the board in November to implement an immediate turnaround rescue plan," board chairman Harald Schmidt told The Namibian.
Source [The Namibian]

Under its previous business plan, the Namibian Government, the owners of Air Namibia, were to have injected NAD1.191billion (USD140million) into the airline in the hopes of turning it to an independent profitable entity by 2016. Operationally, the carrier also adopted a hub-and-spoke strategy in the hopes of transforming itself into a regional player capable of holding its own against local heavyweights, South African Airways (SA).

However, a crippling strike last November, coupled with soaring fuel prices and high operational costs owing to the knock on effects of the global economic crisis, which has hit Namibia's traditional European-tourist markets hard, has taken its toll both financially and publicly.

Schmidt himself has come under fire from sections of the Namibian press who have accused him and his IATA endorsed team of acting unilaterally by "illegally toppling" Air Namibia managers.
"Surprisingly, the same IATA consultants he has appointed are the same who worked on the business plan that they are now undoing and they are the ones who recommended [it] to Cabinet for the business plan to be approved," the source said. "It is clear that the IATA consultants are just after making money in Namibia and want to stay as long as they can."
Source [The Namibian]

Air Namibia's uncertain future has also begun to worry players in Namibia's tourism sector. As Namibia's lone carrier and with few direct international carriers servicing Windhoek, analysts and operators claim that any perceived problems at the airline could "affect the performance of tourism during the first quarter of the current year."