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Air Namibia’s N$193 million restart plan

2020-09-17  Kuzeeko Tjitemisa

Air Namibia’s N$193 million restart plan
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Air Namibia will require at least N$193 million to restart operations after months of huge losses and the grounding of commercial passenger flights due to the Covid-19 outbreak. 
Airlines worldwide are battling for survival after lockdowns and travel bans brought the sector to a virtual standstill. 
In its proposal submitted to government and seen by New Era, the national airline management is asking a N$193 million bailout to help repay debt and resume operations after the lifting of Covid-19 travel bans.  The airline management said its major objectives include optimally utilising the six aircraft, comprising two A319 Airbus planes as well as four Embraer ERJ 135 jets. 

“Restart will be focused on viable routes and will gradually grow to the full schedule as aircraft and crew become available,” reads the proposal. The plan will also include rightsizing the workforce to meet schedule demand. 
“In partnership with the shareholder, stakeholders and foreign missions aggressively promoting Namibia as a safe and tourist destination,” the company said in a 32-page slide presentation. 

The presentation titled ‘Air Namibia Covid Revised Business Plan’, says it also includes implementing corporate and departmental scorecards according to business plan initiatives. 
According to the draft plan, the airline owes N$707 million to suppliers, which include about N$49 million to local suppliers, N$56 million to South African suppliers, N$21 million to regional suppliers, N$110 million in outstanding settlement payments to foreign suppliers and a reminder of N$214 million settlement payment to foreign service providers. 

To resume operations after the lifting of Covid-19 travel bans, the airline said it needs at least N$49 million to pay local suppliers, which include Engen, Namibia Civil Aviation Authority (NCAA), Namibia Airports Company (NAC) and Welwitschia Nammic Insurance, among others. 
The airline said at least N$55 million is needed to pay South African suppliers, such as South African Airways Technical (SAAT), the Airports Company South Africa (ACSA), Bidair Services, and Swissport. 

Other international service providers owed by Air Namibia include Rolls Royce, Embraer, Camps, International Air Transport Association (IATA) and Dunlop. 
A further N$47 million is needed for refunds, crew training, the 2015 KPMG audit, the 2016 PKF initial audit, restoration of ground equipment and Challenge Air. 
Air Namibia last year announced it has reached an out-of-court settlement in a N$400 million legal dispute with Challenge Air. 
Namibian Sun reported at the time that in accordance with the settlement agreement, all attachment orders of Air Namibia›s assets, in line with a German court directive, were suspended, which would allow it to trade normally. 
The newspaper attributed comments to Air Namibia spokesperson Paul Nakawa, who said the settlement was the outcome of consultations with all parties and has been duly executed by both Air Namibia and Challenge Air. 
In cost reduction, the airline says it will reduce its Frankfurt routes to four per week in the next financial year and increase it to seven in the 2021/22 financial year. 

The airline says it will also return the leased A319, extent V5-ANK at reduced leased rates and use reserves to clear all outstanding invoices for engines. 
“This will reduce the cash flow projections significantly. A319 lease extended at reduced lease rate of USD 125 000 and settlement of first aircraft redelivery engine shop invoices, amounting to 12 million USD,” the airline said. 

Furthermore, the airline said it will revive the fuel efficiency gap analysis (FEGA) programme, started in 2008. 
“The FEGA program was instated in 2008 and fuel conversation measures implemented gains are not available at present. Discussions are at an advanced stage with suppliers at Eros, which will see a N$2 reduction per litre,” the document reads. 
Similarly, the airline said, it will engage NAC for a 50% reduction on airport charges for the next six months and renegotiate a payment plan on historical invoices that shall eliminate the interest charges. 

The airline will further look at engaging NCAA for a 50% reduction on aeronautical and safety charges for the next six months, reducing food offering, reducing staff medical benefits, replacing airline offices with GSA, introducing booking fee to recuperate GDS cost and revisiting and re-negotiate all arrangements and contracts where possible. 

The national airline recently proposed a 50% salary reduction for staff that has been grounded due to the pandemic. 
In a letter to trade unions representing airline staff, Air Namibia’s interim CEO Theo Mberirua explained the fixed operational costs were making it difficult for management to conceive ways to guarantee the survival of the beleaguered airline.

2020-09-17  Kuzeeko Tjitemisa

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