WINDHOEK – National airline Air Namibia needs at least N$3 billion to become profitable again, its acting general manager for commercial services Xavier Masule told a parliamentary committee yesterday.
Masule, accompanied by the airline’s acting managing director Mandi Samson and other executives, said this while responding to a question by member of the Parliamentary Standing Committee on Economics and Public Administration McHenry Venaani, during the committee’s consultative meeting with the airline leadership yesterday.
Venaani, the leader of the opposition in parliament, had wanted to know how much Air Namibia will need to become profitable again, to which Masule responded that a cash injection of between N$2.5 billion and N$3 billion would help the state-owned company stand on its own feet.
Masule said the reason why Air Namibia is not getting it right financially was because the shareholders’ investment in comparable businesses is in form of capital assets, such as aircraft, aviation training academies, maintenance hangar and cargo handling facilities.
According to him, this removes the burden for aircraft ownership costs from operating revenue, strengthens balance sheet and lays a solid foundation for the future.
He said with Air Namibia, government subsidies are targeted towards payment of operating expenses such as aircraft rentals costs, maintenance and fuel.
Masule said this model has changed, and already the airline has started with ERJ fleet whereby, in 2017, operating leases were converted into ownership at end of the 36 months period negotiated.
He said currently the airline is only left with the two A330s and A319s aircrafts, which they envisage to also convert.
He said investment required for capital and infrastructure development includes new aircrafts, aviation training academy, the construction of land and hangar, construction of a cargo warehousing facilities at the Hosea Kutako International Airport, amongst others.
Masule said there will be no bailouts required if the shareholder – government - provides these capital assets in the form of equity to the airline. Furthermore, he said historically Air Namibia had a low utilisation of all its aircraft. He said so far, improvements have been recorded on the Embraer ERJ fleet as well as the Airbus A319.
“ERJ fleet charges effective June 2018, having swapped A319 for ERJ on the Gaborone and Durban routes, introduction of additional rotation on Cape Town route using ERJ, increasing its frequency to five weekly on the Vic Falls route from four,” he said.
As from April 2018, he said, Air Namibia is deploying ERJ fleet on Harare and Lusaka, replacing the Airbus A319.
Additionally, Masule also warned against the privatisation of the airline, saying most countries which allowed their airlines to die are now busy revisiting their decisions, as the importance of having a national airline proved vital.
He used an example of Zambia and Tanzania which he said are busy reviving their national airline.