The loss-making national carrier, Air Namibia, is losing more than N$300 million per year on the Windhoek-Frankfurt route and not N$30 million as reported in the local media on Thursday, Public Enterprises Minister, Leon Jooste, has said.
Jooste told the Windhoek Observer that his ministry is worried about the loss on the route, which he said was unsustainable
“This is clearly unsustainable and a solution will have to be found as soon as possible,” he said.
Jooste said he understands that Airbus is working with Air Namibia to study route feasibility, adding that the outcome of this process will determine whether Government will close or maintain the route.
“We (Government as shareholders) need a solution,” he said.
Finance Minister, Calle Schlettwein, told the Windhoek Observer on Thursday that the finically troubled airline had defaulted on its payment on aircraft leasing agreements last and that the State “had helped the airline out”.
He, however, could not give figures, saying he did not have them off the top of his head.
Schlettwein said Treasury had asked the Ministry of Works and Transport to investigate the possibility of discontinuing the Windhoek-Frankfurt route because of the huge losses being incurred.
He said the request was part of the process to rein in loss-making State-owned enterprises, adding that his ministry had identified the Windhoek-Frankfurt route as one of the biggest contributors to Air Namibia’s losses.
Works Permanent Secretary, Willem Goeieman, said in an interview that they had received the request from Schlettwein and that his ministry would discuss the way forward with the Air Namibia management.
“We have to look at agreements, which have been signed by Air Namibia. We will respond to the minister in two weeks’ time,” he said.
Air Namibia staff are said to be unhappy with the proposal to cancel the Frankfurt route. Investigations by the Windhoek Observer this week revealed that management and staff feel that Jooste is overstepping his mandate. The staff accused the minister of taking over the day-to-day running of the airline.
Insiders told the Windhoek Observer that the plan to scrap the Windhoek-Frankfurt route was hatched by Jooste and was already foreseen by the airline’s management following numerous meetings with the minister over the airline’s operations.
Jooste, however, denied this, saying he only had two or three meetings with the airline’s management where they discussed multiple issues related to strategy and commercial operations, but nothing else. Insiders say five meetings were held between the Air Namibia management and Jooste at which he was briefed about the current status of the airline and future plans.
“The default in payments is something that the Ministry of Finance has orchestrated itself to imply that the current management is failing,” a source at the airline said.
“We do not even know who is in charge of Air Namibia now, whether it is the ministry of works or the ministry of public enterprise, as the latter has taken charge of the show while Alpheus !Naruseb is nowhere to be seen,” the source said.
“If the Windhoek-Frankfurt route is scrapped, what will happen to the future of NWR, NTB and so many business sectors in the tourism industry?”
Air Namibia will receive N$486 million from Government in the 2017/18 financial year, which will increase to N$493,9 million in 2018/19 and N$497,7 million in 2019/20.
In the last seven years, Air Namibia has received N$4,2 billion from the Government in bailouts.