Ministry of Public Enterprises has requested a legal opinion regarding Air Namibia’s last minute settlement agreement reached with Belgian company, Challenge Air, which is alleged to have been concluded without its approval.
The government is considering the consequences of the agreement, which might require treasury to fund the multimillion dollar deal or provide guarantees. “I have requested a legal opinion and we are looking into what transpired last week. We will only be able to pronounce ourselves once this is concluded,” Public Enterprises minister, Leon Jooste told the Windhoek Observer.
This is amid concern that the airline, which has gobbled billions in government bailouts over the years, could have committed to an agreement which government would not be able to afford, amid COVID-19 pressures, a position alluded to by Finance minister, Iipumbu Shiimi on Friday.
According to court documents, Air Namibia agreed to begin the process of paying the money owed due to the lawsuit, amounting to €9,867,053 (N$182 million) “On or before 18th day of February 2021. Air Namibia shall cause a first payment to be made.”
Four million Euros will then be paid by Air Namibia beginning with monthly instalments of N$677,175.50 on 16 April, with the final instalment to come on 22 January 2022.
“In the event that Air Namibia defaults on any of its obligations contained hereinabove, and or any payment scheduled per clause 2.2 hereinabove, Challenge Air shall be entitled to execute immediately by a writ of execution,” according to the settlement.
This settlement, however, comes as Air Namibia had previously reached a settlement with the same company and agreed to pay the debt. The airline subsequently failed to honour that agreement.
“Whereas the 1st Defendant (Air Namibia) undertook to pay the amounts due to the Applicant (Challenge Air) in a settlement agreement dated 14th day of December 2019. And whereas the 1st Defendant defaulted on the said settlement agreement and prompted the applicant to institute liquidation proceedings which application was opposed by the 1st Defendant.”
Challenge Air, through lawyer Sisa Namandje applied last year to have Air Namibia liquidated due to an amount which comes from unsettled debt for the leasing and maintenance of a Boeing 767-33A ER belonging to the Belgian company.