Air Namibia (Windhoek International) is to be bailed out by the Namibian government to the tune of NAD1.8billion (USD165.8million) Finance Minister Saara Kuugongelwa-Amadhila has said.
Responding to questions on the country's 2014/15 to 2016/17 Medium-Term Expenditure Framework (MTEF) in the Namibian parliament last week, Kuugongelwa-Amadhila said the funds would be used for the updating of the airline's business plan and payment of outstanding debt.
The motion drew criticism from the Minister of Defence, Nahas Angula, who argued that such heavy capitalization is a burden to the fiscus which, he said, should be focusing more on developing local industry.
“I was talking about Air Namibia in relation to Epangelo Mining [state-owned mining company]. We Namibians have no capital, expertise or technology to run a mine. Government has resources so it can enter into partnerships. So I was saying it would be better if the resources given to Air Namibia could have been given to Epangelo,” he said.
In response to the criticism, Air Namibia's spokesman Paul Nakawa said state funding was only temporary and that according to their projections, the airline would be viable in four years time.
“We are very well in compliance with the turnaround strategy (plan) and we are optimistic that it should be self-sustainable in year five. As we have been saying on many occasions, the new business plan is aiming to turn Air Namibia’s small size into a virtue by competing smartly and swiftly, and by so doing we will ensure that we are decreasing our dependency on the shareholder. This involves a coordinated commercial strategy, bringing together local market intelligence, competitor analysis, pricing, revenue management and sales," Nakawa said.
Namibia's NewEra newspaper says the airline received NAD472.2million in state funding for the current financial year, down from NAD1.132billion the previous financial year. In the future, Air Namibia is to receive NAD579.8million for 2015/16, and NAD760million for 2016/17.
