Air Namibia is being forced to scale down on regional and domestic routes due to a liquidity crisis that stems from an ongoing court case against the now-defunct Belgian carrier, Challenge Air.
The legal tussle with the liquidated European-based airline, which is demanding N$400 million, springs from a sublease agreement in March 1998 and has led to the freezing of the African national carrier’s funds in European banks.
“Due to the ongoing court case by Challenge Air, Air Namibia’s funds have been frozen in Europe and this has caused a severe liquidity problem at the airline,” Air Namibia spokesman, Paul Nakawa confirmed.
The dire situation of the national airline’s liquidity makes it unable to service its operational obligations and has left it with no other option but to cancel regional and domestic flights in what has frustrated travellers.
As reported by New Era, Air Namibia as of June 3, had suspended all flights to Luanda, while flights from Windhoek to Johannesburg have been scaled down one per day from the usual three per day. More so, Windhoek to Cape Town flights will reduce by one, leaving two flights per day remaining on this route to be operated by an Embraer ERJ and one flight using an Airbus A319.
Account settlement issues with SAAT
According to Air Namibia’s Interim CEO, Xavier Masule, the risks associated with the new arrangement is that the entire regional operation could be in jeopardy if any one of the aircraft develops a technical problem. This is because only one out of the four aircraft which make up the A319 fleet is currently serviceable, while the three aircraft which are not in service are undergoing mandatory maintenance checks.
The official maintenance service provider for the Airbus fleet – the South African Airways Technical (SAAT) – had indicated that they will not release, perform the required maintenance work, or accept any Air Namibia aircraft into their hangars until the company’s account was settled amounting to millions of dollars, for work completed. Consequently, Air Namibia has had to suspend a number of southern African regional flights as well.
Air Namibia reportedly made a N$19 million payment to SAAT in April this year and was set to make another N$6,9 million payment on May 31. However, the carrier claims that SAAT will only service the aircraft currently in their possession if the company commits to paying a minimum of N$20 million.
“The information shared herein is for noting, and also seeking assistance to the speedy facilitation of payment of a further N$20 million towards SAAT during the first week of June 2019,” Masule wrote in a letter dated June 3 to Willem Goeiemann of the Ministry of Works.
However, the company has been unable to secure funds needed to restore their operations and the Namibian government, which has been providing subsidies for the carrier all these years may not be willing to assist again this time, Nakawa noted.
Meanwhile, a frustrated local community and business leaders have voiced complaints about the increasing inconvenience they experience due to delays or cancellations on Air Namibia’s flights, demanding for an intervention in the affairs of the embattled national carrier.