Air Namibia’s board of directors sent out a media communication last week to clarify “misconceptions” about the airline. And, according to media reports, the entire board then resigned.
A liquidation case, dating back to 1998 is at the centre of a spat between the board and the shareholder, Namibia’s Ministry of Public Enterprises. The liquidators of Challenge Air, (from whom Air Namibia leased an aircraft in 1998 and who in arbitration in 2019 won a financial award from Air Namibia) are seeking to liquidate Air Namibia as it did not adhere to the settlement plan once COVID-19 struck.
Subsequently, what emerged was a conflict between the board and the Department of Public Enterprises, the second respondent in the case. While the board tried to get a new payment plan from the liquidators, it emerged that the DPE had taken a decision not to defend the matter, and to allow the liquidation to go ahead.
The board says the liquidation of the airline would have had dire financial and social consequences for the DPE, and would have meant the termination of employment of 636 staff. “The board is of the opinion that it is in the best interests of the airline and the Shareholder to avoid liquidation and, therefore, implement the re-start plan that was presented to the Shareholder.” The communication asserts that Air Namibia has a re-start plan superior to the N$7bn (R7bn) plan that “the Shareholder keeps talking about”. It asserts that the sum of N$7bn was anyway based on an incorrect accounting premise.
The release says the airline itself has developed a new strategic plan that provides for restructuring Air Namibia into a sustainable airline. “Currently the airline owns an all-paid-for fleet of six aircraft… The board has also long terminated all the loss-making routes and these are not part of the re-start plan. In summary: all leases will be terminated, all non-profit-making routes are removed from our network, most contracts and agreements are being re-negotiated. Thus, we will be sitting with a very lean and cost-effective airline. The re-start plan will preserve at least 50% of jobs, while enabling the airline to add value to the domestic economy.”
Finally, the board alleges in the same release that it has had to endure the usurping of its functions by the State as shareholder, inconsistent with sound SOE governance. Examples of these allegations are, that the State:
- “directly engages employees and trade unions, bypassing the board;
- negotiates contracts involving the company without the knowledge of the board;
- procures advisory services on behalf of the company;
- manages the appropriated budget earmarked for the company without the involvement of the board. (In fact the airline had an amount of N$948m (R948m) in the 2020/2021 fiscal year by the Ministry of Finance and approved by Parliament and the board has to date not been briefed on how these funds were disbursed to the airline if at all, other than a monthly allocation for employee salaries);
- has initiated a restructuring exercise, without prior knowledge of the board.”
