RPT - ANALYSIS - Air Namibia Announces Voluntary Liquidation Amid Losses, COVID-19

RPT - ANALYSIS - Air Namibia Announces Voluntary Liquidation Amid Losses, COVID-19

JOHANNESBURG (UrduPoint News / Sputnik - 14th February, 2021) As Air Namibia announced ceasing operations and recalling the fleet earlier this week, aviation experts explained to Sputnik the reasons behind yet another African airline going out of business amid COVID-19.

On Wednesday, Air Namibia announced on Twitter that, effective February 11, all operations would be suspended, aircraft would return to base and no new reservations would be taken. The airline also pledged refunds to all affected passengers.

Unions have been at loggerheads following the announcement. But to experts, the news on Air Namibia's wreckage came as no surprise. The company was greatly indebted to European lenders despite numerous government bailouts. Namibia's flagship carrier still owes more than 104 million Namibian Dollars ($7.1 million) to Germany alone.

Aviation expert Phuthego Mojapele told Sputnik that the bulk of the money used to service Air Namibia comes from the public. This came as a byproduct of government interference.

"board members have been resigning citing government interference," Mojapele said, adding that the time for the government's intervention came now.

"This is where government should step up and find its own lucrative routes. They must be able to sustain the current routes," the expert said.

Air Namibia has been operating at loss since the government took it over as the 100-percent shareholder in 2013. From then on, it has not made profit. Air Namibia ran up debts month after month. In the ten years to 2019, the government invested 477 million Namibian dollars to keep the loss-making airline afloat.

"Air Namibia is in a predicament. It has no return on investment. If the Namibian government wants to compete with those with power they must be willing to go pound for pound.

They are swimming in debt," Mojapele said.

Lats summer, the Namibian Ministry of Finance said it no longer had the funds to save Air Namibia from its doldrums. Similar to South African Airways, which is currently under business rescue, Air Namibia may soon have to come up with a strategy.

AIRLINES TO KEEP CHOKING ON COVID-19

According to aviation expert Desmond Latham, Air Namibia's debt before European lenders amounted to 8 million Euros ($9.7 million) last June, bringing it to the brink of collapse.

"So it is an established fact that Air Namibia had not been operating properly for at least seven years prior to the pandemic. The second reason is that COVID-19 caused the drop to zero of international travelers into Namibia. We have been told that about 600 workers are going to lose their jobs," Latham told Sputnik.

The expert voiced hope that market laws kick in "because if there is a demand somebody will supply" and an alternative carrier picks up the abandoned flight routes. But overall, Latham appeared rather pessimistic about the prospects of global civil aviation in the foreseeable future.

"Generally speaking, we are looking at least at another year of this catastrophic effect of the pandemic on aviation," the expert said.

Latham proposed that airlines reconsider the prevailing operations model and choose leasing plans over ownership, as well as renegotiate the routes so that to preserve international tourism.

According to the expert, some airlines went "badly wrong" with their risk analysis of the pandemic-era operations all to please the shareholders who, he said, "don't want to hear the bad news." The cases he referenced in point were the United States' Delta and Australia's Qantas, as well as the Qatari and Chinese air industry.