Earlier this week, Botswana’s national airline revealed plans to cut down half of its staff as part of a restructuring program that will transfer ground handling operations to a new company.
Air Botswana director, Agnes Khunwana, said that in terms of the restructuring numbers, “we have a staff complement of about 450 members and the intention is to have about 210 staff members.” Consequently, a majority of departed staff will be moved to the new ground handling subsidiary, while a “minimal number” will face retrenchment.
Tebogo Masire, Chairman of Air Botswana made it known that the ground-handling staff comprised “up to two thirds” of Air Botswana’s 450 employees and they are not necessarily integral to the business. Some of these affected staff will be re-employed, as a way of returning profitability and refocusing on core operations.
Nevertheless, Air Botswana has been running losses since 2008, due to an ageing fleet, high maintenance costs, equipment failure, and route redundancy amongst others. Although presented with several privatization opportunities that have been unsuccessful, the southern African country’s carrier still struggles with only three aircraft serving domestic and regional routes.
Some African countries struggling with their national airlines have keyed into privatization with the hopes of reviving their flags. Côte d’ Ivoire, Mali, Lesotho and Kenya have recorded success following the privatization of their airlines.
In spite of a two-year privatization process which took place in Kenya, Kenya Airways was the African airline to be privatized. With 77 percent of the shares sold to a broad array of private investors, Nairobi- The country’s capital turned into a regional hub and the airline has been profitable ever since.
In a study of The Effects of Privatization on the Financial Performance of Kenya Airways, it was revealed that there were positive improvements in the performance of Kenya Airways after the privatization process was completed. An increase in profitability, liquidity and financial efficiency resulted from the privatization.
Overtime, privatization has proven its economic worth and the shift to private ownership generally improves the financial efficiency of any company. There have been a few exceptions however but the superiority of private firms over public ones is clear in most countries.
Besides, the privatization of a government-owned outfit often leads to economic and financial improvement, creates jobs, sustains them and offers more new trends in the firm that supports its existence.
Despite efforts to privatize the ground handling operations in Botswana, the government and policymakers should borrow from the experience of Kenya Airways’ privatization and create an enabling political and economic environment where a huge chunk of privatization can be achieved.
By Treasure Nnabugwu.
