WINDHOEK – Air Namibia’s current management yesterday confirmed that the national airline has managed not only to break even for the last four consecutive months but has actually made a profit.
According to the airline’s Chief Operating Officer and acting Managing Director, Rene Gsponer, turnover at the historically beleaguered airline averaged N$188 million for the period July to October 2014, with October turnover reaching an all- time high of N$205 million. During the same period in the 2013/14 financial year turnover averaged N$165 million, with October, which is the traditional peak season month, realising N$178 million last year.
“To our knowledge, this is the first time in four consecutive months that Air Namibia has not only broken even, but made a profit. The major contributing factors have been the improved revenue management systems and significant improvement in on time performance. The airline is now departing and arriving on time on all the routes it is operating and customer confidence has been restored resulting in high sales volumes. The termination of the loss making Accra route in June 2014 is also contributing to the overall positive performance of the airline,” Gsponer told New Era.
However, the acting MD said he was not in a position to single out any of the airline’s profitable routes as this is part of Air Namibia’s market competitive intelligence. “Ours is a coordinated commercial strategy, bringing together local market intelligence, competitor analysis, pricing, revenue management and sales. The milestone thus far is that losses from the loss making routes are now minimal compared to the same period last year,” explained Gsponer.
It is important to point out that the period under review is always the peak demand season of Air Namibia while the period December to February is generally considered low sales season due to the festive holidays and the peak of the winter season in Europe.
Gsponer said Air Namibia’s liabilities are mostly current, and those expenses incurred and paid on a monthly basis. These are all trade-related liabilities which relate to fuel, maintenance, aircraft leases and operational expenses.
“The airline currently does not have overdraft facilities with any financial institution and this has been the case for the past one year or so. The support which the Government of the Republic of Namibia avails to Air Namibia comes in the form of grants and is converted as shareholders’ equity at the end of each financial year,” noted Gsponer.
At the end of October Air Namibia pushed forward the throttle to implement its 2011 business plan that calls for a leaner and cost effective structure, a move which sent some employees in a downward spiral of employment uncertainty with the airline.
However, the national airline said although it is unequivocal in its pursuit of implementing the business plan to the fullest, through the exercise of “business re-engineering” it has no plans to force employees into retirement through retrenchment.
Instead, the airline said, “voluntary exit scheme, early retirement scheme, non-renewal of employment contract and outsourcing of opportunities” are some of the “options being considered and studied to allow for a leaner, fit-for-purpose Air Namibia”.
Air Namibia’s turn-around business plan was approved by cabinet in 2011, but the airline yesterday did acknowledge that it had not, until October 2014, aggressively pursued the attainment of some key elements in the business plan of cost reduction and a lean organisation.
Furthermore, about two weeks ago the national airline hit back at the announcement of low-cost airlines embarking on regional routes saying it welcomes competition with open arms but cautioned that as an airline that strives to offer five-star service it cannot be compared to ‘budget’ airlines that offer the bare minimum.
By Edgar Brandt