By Edgar Brandt
WINDHOEK – While Air Namibia managed to increase its operating revenue, for the period April to December 2013/2014, by 19 percent, the national airline’s top management yesterday admitted that it still needs to increase its revenue stream to attain operational profitability in accordance with its turnaround strategy.
“We can cut costs and cut costs but we will never be profitable if we don’t increase our revenue… Revenue is the key,” said Chief Operations Officer and acting Managing Director, Rene Gsponer, during a question and answer session with the media.
Air Namibia reported operating revenue of just over N$1.2 billion in 2013 compared to just over N$1.4 billion in 2014. In fact, Air Namibia broke several revenue generating records last and reported overall 2014 revenue of about N$2 billion. However, Gsponer yesterday noted that the airline is still working on operational profitability, which they hope to achieve within the next two years, according to the government approved turnaround plan.
One of the factors that negatively influenced the national airline’s bottomline last year was the international Ebola scare, as visitors from elsewhere in the world were reluctant to fly to any part of Africa.
According to Air Namibia’s General Manager: Commercial, Xavier Masule, between November and December 2014 visitors from Germany declined 11 percent, US visitors declined 7 percent and visitors from the United Kingdom declined by 5 percent. Masule estimated that Ebola’s negative effect on Air Namibia’s volumes could have resulted in revenue declines of about N$50 million.
Masule cautioned, however, that the 19 percent increase during 2013 and 2014 in operating revenue stems from a rather “low base”. “We expect more revenue growth but not at the same level and most of this growth will come from increased flights. However, for 2015 we expect revenue growth of between 10 percent and 15 percent,” said Masule.
Meanwhile, Gsponer explained that one way to improve the national airline’s revenue is to improve operational integrity. This the acting MD hopes to achieve with Air Namibia’s modern fleet together with streamlined operations processes and procedures, including the establishment of the Integrated Operational Control Centre. And, it seems as if the focus on operations is paying off for the national airline as it has during the last 18 months improved its on-time departures to over 95 percent. This is compared to a world average of about 90 percent, resulting in Air Namibia consistently being ranked in the top 10 out of more than 400 airlines around the world.
In addition, as Air Namibia refines its human resources structure to comply with regulatory framework, Gsponer noted that “the company needs the right people in the right places”. Thus far Air Namibia has reduced the number of foreign pilots by 30 at a cost saving of N$2 million per month. Also, the number of employees at Air Namibia have steadily reduced from 745 to the current staff complement of 700.
According to the turnaround strategy, the airline should ideally employ total staff of 595. Gsponer said this reduction in staff will be achieved through strategies such as early retirement and voluntary exists.