Board right to fight for airline survival
A last minute settlement agreement between Air Namibia and Challenge Air which has saved the national carrier from immediate liquidation and has bought more time for critical evaluation appears to be a right decision that was taken in the best interest of both the airline and country at large.
As a publication we have always argued that the proposition to liquidate our national and flagship carrier, Air Namibia, is one that needs careful consideration and by all means necessary, the first and only option should always be one that looks at saving it from going under the hammer.
Despite the lack of support from authorities, we agree with the Air Namibia board that the liquidation of the airline would have triggered disastrous events of default in the current lease agreements and all 636 employees of the airline would have been thrown to the streets.
We are also encouraged that the airline has, in response to the latest industry developments, recently developed a new strategic plan which provides for restructuring Air Namibia into a leaner, competitive and sustainable airline.
“It is worth mentioning that, indeed the airline sits with historical debts (dating back to as far back as 23 years) and those debts that are government guaranteed need to be serviced whether the airline is liquidated or not. Currently the airline owns an all paid-for fleet of six aircrafts, and which can be utilised to generate revenue without the burden of lease costs. The board has also long terminated all the loss-making routes and these are not part of the restart plan. In summary: all leases will be terminated, all non-profit making routes are removed from our network, most contracts and agreements are being renegotiated. Thus, we will be sitting with a very lean and cost-effective airline,” the board said in a statement signalling that Air Namibia can indeed be saved despite political pressure to shut it down.
What we can never deny is that, Air Namibia has played a significant role in nation building and national identity. Historically, airlines have been regarded as important national symbols and they have been used by governments as ‘chosen instruments’ for projecting their countries internationally. This key role remains for Air Namibia.
As authorities still battle for or against the survival of Air Namibia, they should take time to consider that there are some things worth protecting and a national airline makes the list of these things. They should also consider the spill over benefits of Air Namibia which among other things create scope for both business and tourism to flourish. This too is a critical aspect of Namibia’s post Covid-19 recovery.
Indeed, the decision to bail-out Air Namibia, particularly in this time, is a difficult one. However, the decision should not be based on historical factors such as historic poor financial management, inappropriate business model, deteriorating brand equity, skills mismatch in strategic areas, ill-conceived route network, aging fleet, and poorly negotiated leases, amongst others. Instead, it should be based on the future outlook of the airline and the work that has been done by the current board to put the airline back on positive footing.