Tuesday, March 5, 2013

■ NAMIBIA: Air Namibia due for $120mln bailout from Government this year with more big spending to come.

Air NamibiaIn what is fast becoming a bad trend amongst southern African carriers - the South African government "loaning" South African Airways (SA) over USD500million and Zimbabwe set to cover Air Zimbabwe's USD188million debt bill - it appears that the Namibian Government has now budgeted a whooping USD120million (NAD1.1billion) to pay for "business plan updates and outstanding debts" for struggling national carrier Air Namibia (SW), with further allocations due until 2016.

Air Namibia
(© EI-AMD)
Under the Namibian Ministry of Finance's recently published "Estimates of Revenue and Expenditure for April 2013 to March 2016," a further USD40million (NAD362million) is budgeted for 2014 with USD33.5 (NAD304million) needed in 2015.

Finance Minister Finance Minister Saara Kuugongelwa-Amadhila tepidly stated that:
"I must emphasize that the perpetual lifeline extended to Air Namibia is a cause of national concern. A lasting solution is  warranted."

In mid February, Namibian Finance Permanent Secretary Ericah Shafudah said the airline would only receive an amount of USD18million (NAD164 million) during the 2013/2014 book year, starting on 1 April 2013, but following a cloak-and-dagger meeting between Government and Air Namibia's board over the airline's proposed new business plan in late February, it appears that the Government will once more foot thecarrier's ever increasing bill.

According to Namibian paper, The Namibian:
"Air Namibia's bailout for the coming fiscal year equals or exceeds the entire operational budget for Regional and Local Government, Housing and Rural Development (N$1,1 billion), as well as the entire operational budget for Agriculture, Water and Forestry (N$1,03 billion).

Air Namibia's budget is exceeded only by the operational budgets of Education (N$10,1 billion), Health and Social Services (N$4,6 billion), Defence (N$3,4 billion), Finance (N$3,2 billion) and Police (N$2,8 billion), as well as Labour and Social Services (N$1,5 billion). All the other votes have smaller operational budgets than Air Namibia.

Depending on which figure in the budget is correct, Air Namibia's bailout either equals or exceeds state pension payouts for the whole of 2013-14. It is bigger than the entire development budget for all the votes except Transport (N$1,7 billion) and Agriculture, Water and Forestry.
Source [The Namibian]

Under its previous business plan, the Namibian Government, the owners of Air Namibia, were to have injected USD140million (NAD1.191billion) over three years into the airline in the hopes of turning it to an independent profitable entity by 2016.