Staff Writer

The Air Namibia board resigned en masse on Wednesday after writing a scathing letter, accusing government of corporate governance violations in its dealing with the airline.

First to hand in his resignation was Willy Mertens, who is reported to have resigned on Monday, after the airline on Friday had entered into a settlement agreement with Belgian company, Challenge Air whom it owed for a 1998 airplane lease agreement.

Air Namibia board Chairperson, Escher Luanda, and Heritha Muyoba are reported to have tendered their resignations on Wednesday, a position confirmed by Public Enterprises Minister, Leon Jooste, with the status of Captain Alois Nyandoro unknown by the time of publishing.

In the letter, the airline board hit back at government’s accusations that it was not consulted over its decision to enter into settlement agreement on Monday.

“On the issue of consultation with the shareholder, the Board can confirm that the shareholder was engaged and their position was to leave the matter to the Board, so long as the impression was not created that settlement agreement would bind the shareholder,” the national airline Board said in a statement issued on Wednesday.

The Airline board also accused government of meddling in its affairs, such as negotiating the carrier’s contracts, directly engaging employees and trade unions without its knowledge.

“The Board has, over a significant part of its tenure, had to endure the usurping of its functions by the state as shareholder, which is not consistent with sound SOE governance. The situation with Air Namibia has degenerated…. These are unfortunate instances that fly in the face of good corporate governance and have made it extremely difficult for the Board to execute its fiduciary role.”

The Air Namibia board said the agreement which will see it pay N$182 million to settle the debt owed to the Belgian company will not require any government funding or guarantees.

“The Board signed with the full understanding that the agreement had no guaranteed backing of the State and there is no single mention of the Government/State/Ministry of Public Enterprises in the agreement. It should also be noted that, the window of opportunity to file for liquidation still remains open. In all these, the Board stands firm by its decision believing that the decision was taken in the best interest of Air Namibia.”

Air Namibia said the action taken by the company’s Board was within its mandate and aimed at safe guarding the interest of the airline.

“The Board of Directors remain firm that it acted in the interest of the Shareholder. The Board is of the opinion that it is in the best interest of the airline and the Shareholder to avoid liquidation and, therefore, implement the re-start plan that was presented to the Shareholder. The Board duly embraced its mandate and started executing its role in earnest. Throughout its tenure, the directors always endeavoured to uphold the highest levels of integrity and professionalism as it represents the interests of the Shareholder and the Company,” the statement read.

“It may be worth the while to set out what liquidation would mean for Air Namibia and its stakeholders, both primary and secondary. The liquidation of the airline would have triggered events of default under lease agreements in respect of which the Shareholder issued Guarantees, which in turn would have nullified all options the shareholder is considering regarding the future of the airline as insolvency constitutes a repudiatory breach of the lease agreements. The impact on employees would have been even worse in the sense that liquidation would have meant termination of employment for all 636 employees of the airline.”

The Air Namibia board accused the Ministry of Finance of making misleading statements that the airline would require N$ 7 billion to implement its turnaround strategy.

“An impression has often been created that the airline needs N$ 7 billion to re-start its operations. This figure is not factual and was based on a wrong premise. In fact, the N$ 7 billion involved bringing forward future debts from as far into the future as 2025, and create the impression that these debts are due and payable. This figure has also been further clarified with the shareholder at no fewer than three (3) forums.”

The development comes as the Ministry of Public Enterprises has requested a legal opinion regarding Air Namibia’s last minute settlement agreement reached with Challenge Air, with the Ministry of Finance having distanced government from the arrangement.