Govt rules out SOE bailout … as Air Namibia remains grounded

Staff Writer

Public Enterprises minister Leon Jooste maintains that the government has no immediate plans to bailout any State Owned Enterprises (SOEs) despite a number that have been hard hit by the negative impacts of COVID-19.

This comes as SOEs such as Air Namibia have already raised alarm bells. The national carrier already had an existing precarious financial position which was made worse by the pandemic.

Jooste, however, said the government going forward maybe be forced to come to the aid of some SOEs if the negative effects of COVID-19 become prolonged.

“We are monitoring the situation continuously and assessing the impact on their commercial feasibility. There are no immediate bailouts planned at this stage but it may become necessary in future. Although certain sectors are more affected than others, the fact is that the pandemic has affected all sectors to some degree. The pandemic is affecting our entire economy. No business, SOE or private sector, will escape unscathed,” he said.

In terms of funding, Jooste warned that banks have become stricter with their lending policies as part of measures to minimize their risks. This decision impacts the cost of securing lines of credit for government owned entities.

“We are also seeing signs that the financial institutions are becoming more wary and risk averse for obvious reasons making it difficult and expensive to secure financing,” he said.

Of the hardest hit, Air Namibia continues to hemorrhage funds. Its flights have been limited due to COVID-19 restrictions and creditor woes. Nevertheless, it still presented a N$7 billion turnaround plan to the shareholder.

“The global airline industry is facing the most dramatic headwinds in modern history. African Airlines have been struggling for some time already and the pandemic has definitely not helped the situation. It’s impossible for any airline to operate profitably under the current circumstances and for airlines that have been operating at a loss before the pandemic, the situation is even more dire. The lockdown restrictions will affect all airlines, Air Namibia included,” he said.

The national carrier on Monday announced the continued suspension of its domestic and regional flights. This came after President Hage Geingob on Friday cited rising COVID-19 positive cases as he announced the extension of stage 3 lockdown measures across the country’s 14 regions for an additional period of 14 days.

“Following the announcement to extend the lockdown on Khomas region, Air Namibia hereby informs the public that the suspension of our domestic flights has been extended till such a time when local travel is allowed,” the national carrier said.

“Additionally, the suspension of regional and international flights has been extended until further notice, depending on market demand and reopening of international borders of countries where the airline operates to.”

The airline was, however, vague on what role it will play in the planned tourism revival initiative which starts tomorrow, considering the grounding of its fleet.

“As a stakeholder in the tourism industry, Air Namibia will continue to participate in the tourism revival initiative,” Air Namibia said

According to the airline, before the recent temporary suspensions, its domestic flights performance was picking up, averaging above 50 percent load factor.

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