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Ebola crisis ÔÇö Air Nam loses N$50m

Mon, 26 January 2015 03:10
by Timoteus Shihepo
News Flash





Air Namibia Acting Managing Director, Rene Gsponer has revealed that the Ebola outbreak in Africa has resulted in the company losing N$50m in potential revenue monthly.
This is because of a dwindling number of tourist coming to Namibia. However Namibia has not recorded a single case of the deadly disease but is now suffering because of the perception adopted by most tourist from Europe about the disease.
Gsponer added that although Air Namibia made a profit of N$5m to N$25m from July to August last year the company is still not out of the woods.
“Up to October because it was a peak season we increased our booking numbers, our load factors and also our revenue so all the trends were very good up to October but now we have a bit of a crisis because we’re are facing now the Ebola effect there is no question about that,” he said.
Gsponer said these will be the toughest months and that it will be difficult to change the perception as they we will have to make more marketing sales as well being forced introduce price tickets sales.
“We will be selling to the world that there has never been a case of Ebola in Namibia, making people understand that this is the most beautiful place and it’s safe. This means more marketing money, more sales, and more appearances in Europe on paper, internet and so. Other issues is also pricing when you have low demand, pricing has to be lowered so anybody who is travelling within 60 days will get unbelievable specials,” he said.
He added that, “We will not change our pricing structures but we have to attract new demands by exceptional specials. That will be between now and the 1st of April. The same way if people want to go to Europe you will probably see in the next 90 days lower price tickets that you have ever seen because of the demand that needs to be balanced.”
Profitability
In July last year it was also announced that Air Namibia started making profit after a turbulent period of making loses especially between 2012 and 2013. Gsponer however said the profit wasn’t that much.
“We didn’t make a lot of profit, to break even for us it’s already good but the fact is in July, August, September and August last year we made between N$5m to N$25m. That’s not a lot of money but it’s just breaking even and it’s not going to last for long because in the situation we are in now if we have a bad month we will be losing about N$50m revenue in one month,” he said.
He also said that money won’t last long especially if you consider the running costs which is more or less fixed at N$185m.
“We need to be making a revenue of N$200m per month if the costs is at N$185m and that means you make a profit of N$20m which is very nice. In fairness we also have to say this, from August to October is the peak season, the European and the Namibian market is very good in those months. In October alone we made a revenue of N$205m which is a record,” he said.
He added that it’s not only Ebola which has been affecting the revenue but seasonal effects as well. “Our peak is season is from August to October as from mid-December to January nobody wants to travel because people just want to have time with their family. The current situation is that we haven’t really recovered from the ‘staying at home’ mood. Now how much is Ebola, how much is the seasonal effects and how much is competition the situation is currently tough,” he said.
The future
Gsponer is however excited at what the future holds for the company saying that they will clamp down on excessive losses that has plagued the company in past years.
“I think in the future we may have losses of only N$200m to N$300m whereas in the past it used to be N$600m to N$800m a year. We are definitely going in the right direction. We are however having now the hardest times of the year. We have nice air crafts but if they are not full we cannot make money so our revenue target is N$200m a month if we achieve that we are all happy we are making money, if we are missing that by N$20m then 12 times N$20m is definitely the loss of the year,” he said.
He also said that two third of the Turn Around Strategy has been completed and they will be looking to add more routes including that of a two way between Walvis Bay and South Africa, as well that of Kenya and possible of Angola among others.
“We have very high fixed costs because we have high products which has high lease cost and it needs to fly more. But it’s a little bit of a trick because you can’t fly more if the demand is low. Over the next years we need to look where the demand is and we have identified many routes that will be added to the current ones.”