Air Namibia announces cancellation of operations as liquidation looms

Air Namibia has announced the cancellation of all its operations, effective February 11, as the country’s government is poised to announce its flag carrier’s voluntary liquidation.

In a late-night notice on social media, the 75-year-old airline announced that all its aircraft would be grounded. Its reservations system was suspended with no new bookings being accepted from February 11, 2021. Passengers have been advised to register claims for refunds.

Air Namibia spokesperson Twaku Kayofa told ch-aviation the government was expected to make an announcement on February 11 to explain its decision. Kayofa confirmed that trade union representatives had informed the company’s 636 employees on February 10 that they would receive an ex-gratia pay-out equal to 12 months of salary, but no benefits.

The government, the airline’s executive, and unions are to meet on Thursday to discuss the liquidation’s finer details. Cabinet has already approved the voluntary liquidation of the airline with a three-person board of directors now appointed to prevent the airline’s assets from being attached in case of failure to pay creditor Challengair (1I, Brussels National) its first instalment next week.

According to the Namibian Sun newspaper, the board includes lawyer Norman Tjombe, businesswoman Hilda BassonNamundjebo, and economist James Cumming who will collectively assist interim CEO Theo Mberirua in running the company.

The decision to shutter the 75-yearold carrier follows the airline’s board’s resignation on February 3, after the government did not oppose an application in the Namibian High Court to have the airline liquidated. The application was made by the estate of former Belgian operator Challengair over outstanding payments on legacy debt of 1998 concerning the lease of a B767-300(ER).

Lawyers representing both parties reached an 11th-hour out-of-court settlement on January 28 for EUR9.9 million (USD11.9 million), but without the government’s apparent support, who said it could not afford to bail out the airline, nor had it managed to find it a strategic equity partner. The first installment of EUR5 million (USD6 million) on the settlement was due on February 18.

Kayofa told ch-aviation Challengair would join the list of creditors following liquidation. Finance Minister Ipumbu Shiimi earlier said a turnaround plan for the cash-stricken flag carrier would cost taxpayers significantly more than NAD7 billion Namibian dollars (USD461.6 million), after already spending NAD8.4 billion (USD554 million) in the past 10 years to bail out the airline.

He said Air Namibia had been loss-making since its inception, plagued by a flawed business model that rendered 15 out of its 19 routes unprofitable. A combination of the types of aircraft, routes, high employee numbers, and other structural inefficiencies had contributed to the financial distress of the company.

At the time of its collapse, Air Namibia’s fleet entailed four A319- 100s (of which two are owned and two are leased from Deucalion Aviation Funds), two A330-200s (both leased from Castlelake), four EMB-135ERs (financially leased from HOP! (A5, Paris Orly) but unencumbered since October 2020), and one inactive B737-500 (owned).

The Namibian government has been in contact with the lessors, Kayofa said.