AirNam’s biggest bail-out ever

By: JO-MARÉ DUDDY

AIR Namibia will guzzle at least N$1,1 billion of the taxpayer’s money this year to stay in the air – the single biggest bailout for a state-owned enterprise (SOE) since independence.

Over the next two fiscal years, the airline will gulp at least more than half a billion more: N$362,2 million in 2014-15 and N$304,1 million in 2015-16. In total, Finance Minister Saara Kuugongelwa-Amadhila intends dishing out at least N$1,8 billion on a wing and a prayer during the current Medium Term Expenditure Framework (MTEF).
The figures are contained in a section for SOEs in the Estimates for Revenue and Expenditure 2013-16, which states that the money is needed for Air Namibia’s “business plan updates” and to pay outstanding debt. However, the budget for Air Namibia under the Works vote is more.
According to the Works vote, Air Namibia will receive about N$1,98 billion over the MTEF: N$1,23 billion in 2013-14, N$392,2 million in 2014-15 and N$533 million in 2015-16.
Air Namibia’s bailout for the coming fiscal year equals or exceeds the entire operational budget  for Regional and Local Government, Housing and Rural Development (N$1,1 billion), as well as the entire operational budget for Agriculture, Water and Forestry (N$1,03 billion).
Air Namibia’s budget is exceeded only by the operational budgets of  Education (N$10,1 billion), Health and Social Services (N$4,6 billion), Defence (N$3,4 billion), Finance (N$3,2 billion) and Police (N$2,8 billion), as well as Labour and Social Services (N$1,5 billion). All the other votes have smaller operational budgets than Air Namibia.
Depending on which figure in the budget is correct, Air Namibia’s bailout either equals or exceeds state pension payouts for the whole of 2013-14. It is bigger than the entire development budget for all the votes except Transport (N$1,7 billion) and Agriculture, Water and Forestry (N$1,3 billion).
When she tabled the MTEF last year, Kuugongelwa-Amadhila budgeted only N$164 million for Air Namibia in 2013-14, and N$100 million in 2014-15.
The minister last Tuesday tabled the 2013-14 budget without releasing the Estimates for Revenue and Expenditure. In her budget speech, Kuugongelwa-Amadhila merely mentioned that Air Namibia would receive “additional support to maintain its operations”.
She did, however, add that the “perpetual lifeline extended to Air Namibia is a cause of national concern”. “A lasting solution is warranted,” Kuugongelwa-Amadhila said.
It is not the first time that Air Namibia’s failure to take off financially was highlighted in the minister’s budget speech.
In 2006, Kuugongelwa-Amadhila said the airline remained a concern and that its financial situation continued to deteriorate. She said Air Namibia had an important role to play, especially in the tourism market. “But to realise that, the company needs to transform itself to be better able to face the challenges of the highly competitive industry in which it operates,” the minister said at the time.
In 2005, Kuugongelwa-Amadhila said reform efforts at Air Namibia were “generating positive results”. The minister said she expected that the budgetary transfers to the airline would reduce over the years and that they would  be phased out gradually.

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