Air Namibia to resist liquidation

THE financially troubled Air Namibia is opposing a High Court application in which a Belgian lawyer wants the national airline to be declared bankrupt and liquidated.

The airline has given notice that it will be opposing an application for its liquidation, which was filed at the High Court late last week.

In the application, Belgian lawyer Anicet Baum, liquidator of the company Challengair, is claiming that the airline is insolvent as it is unable to pay its debts, and is asking the court to order that it should be wound up.

Baum says Air Namibia acknowledged in a settlement agreement with him in December last year that it owed Challengair an amount of 18,2 million euro (about N$350 million), which it undertook to repay in instalments until September 2021.

To date, the airline has paid 8,2 million euro (about N$158 million) of that debt, and has not honoured the settlement agreement, Baum is claiming.

Air Namibia’s debt woes originate from an agreement for the lease and maintenance of a Boeing 767 aircraft which it and Challengair concluded in 1998.

After a dispute between the two companies arose, they agreed near the end of 2005 to refer the matter for arbitration, which was done in Paris, France.

The arbitrator delivered a final award in Challengair’s favour in August 2011, and a court in Munich, Germany, in January 2015 declared that the award could be enforced in Germany, according to documents filed at the High Court.

Baum says since mid-April Air Namibia has not made any payments as undertaken in the settlement agreement, and its board chairperson and past and current chief executive officers have acknowledged that the airline is unable to pay its debts as they become due.

The government, as shareholder of Air Namibia, has also publicly stated numerous times that the airline is insolvent and unable to pay its debts, and that its liabilities exceed its assets, Baum also says in an affidavit filed at the court.

He adds that Air Namibia made a commitment on 14 July this year to pay its debt to Challengair in terms of a changed payment schedule – but it has been unable to meet that schedule as well.

That shows the airline is deep into commercial insolvency, Baum also says.

He further says despite receiving large-scale financial assistance from the government over several years, the airline has been unable to change its business for the better, and it would be in the interest of the public to have it wound up.

The government in December last year made a N$578 million guarantee available to the cash-strapped airline to sustain its operations until the first quarter of 2020. These funds were used to settle part of the debt owed to the Belgian company.

The airline initially wanted a N$1,6 billion bailout from the government in September 2019 for its operations, threatening that without the lifeline it would be forced to shut down.

Minister of public enterprises Leon Jooste has said for Air Namibia to restore solvency and implement a new feasible business model the airline would require between N$4,3 and N$5 billion, depending on various factors.

In July this year, minister of finance Iipumbu Shiimi said the airline needed N$7 billion this financial year to survive. This amount also takes into account outstanding debts of more than N$5 billion, which includes leases.

Shiimi, who is also the chairperson of the Cabinet committee on treasury, said they are assessing different options to restructure Air Namibia, because the current model is unsustainable and unaffordable.

Baum is represented by lawyer Sisa Namandje.

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