A loss making Air Namibia risky for PPP- Aochamub
Namibia Airports Company acting chief executive officer, Albertus Aochamub has said entering into a Public Private Partnership (PPP) on the Hosea Kutako International Airport project with an Air Namibia that is not financially sound would be risky.
Aochamub was speaking at Air Namibia’s stakeholder convention hosted in the capital yesterday where he indicated to this publication that investors may fail to make good of their investments if the airline does not make money.
“Among the number of risks that need to be addressed within a PPP arrangement for Hosea Kutako International Airport, Air Namibia is one (but) it’s not the only one. Going forward, if somebody holds that concession, (if) an Air Namibia that is making 50% of the revenue and more than 50% of traffic at that airport is unable to meet their obligation financially, it means that the concession holder would not be making the money that they are expecting to make on a monthly basis for them to realise the investment in a short period,” he said.
The former presidential advisor also cautioned that it would further mean the 20-year concession would prolong to between 25 and 30 years.
The financial viability of the airline thus needs to be addressed before cabinet makes a decision to partner a private player for the country’s prime airport, he added.
Aochamub’s caution also comes in the wake of the World Bank having recently advised Namibia to privatise its airport although a cautionary report by the International Air Transport Association (IATA) warned against such a move.
Faced with the urgency to be financially sound, however, Air Namibia’s acting managing director, Mandi Samson, is convinced they can reach operational break even in three years’ time.
This then means the airliner will have to increase its aircraft utilisation by operating more flights to new destinations, “While keeping our fixed costs constant,” she added.
“Additional routes you saw are those as launched last week and also this is evidenced by the flights that we had also introduced during the 2016/17 year to Gaborone and Durban, Lagos and Accra and also the Ondangwa-Walvis bay route,” she said.
Samson told stakeholders that the outlook for these destinations remains positive and would go a long way towards providing additional revenue flows.
The first flight to Lagos-Accra took off with a 100% load factor buoyed by a large number of church persons.
Air Namibia is also in the process of doing feasibility studies to identify additional options to properly utilise the A330s whose results will be shared with stakeholders at a later stage if granted governmental approval.
The Airbus A330 is a medium- to long-range wide-body twin-engine jet airliner made by Airbus.
“We are aware that this is also currently the biggest elephant in the room if one looks at Air Namibia and where we are financially. It is that we have in our possession very expensive assets that we are not optimally utilising,” she said.
On a lighter side, Air Namibia reported that it has for the first time in 17 years tabled for adoption its financial statements from 1998 to 2014.
These will now go to cabinet and made public thereafter while three female engineers have also been employed, a milestone for the company.
They have also acquired certification to do own maintenance on fleet with first ever heavy maintenance checks done at Eros airport, something which had to be done in South Africa before with huge costs.
This reduces costs by 38% excluding costs for components and spare parts.