Challengair (1I, Brussels National) has begun seizing funds belonging to Air Namibia (SW, Windhoek Int'l) as it seeks to fulfil a German court ruling in its favour.

The defunct Belgian carrier was awarded EUR25 million euro (USD29 million) by courts in Paris (in 2011) and Munich (in 2015) as compensation for outstanding debts owed by Air Namibia for services such as maintenance, leasing dues, and insurance premiums that were part of a failed 1998 wet-lease agreement involving B767-300(ER) msn 25535. Both Air Namibia and Transnamib were found liable as the latter was responsible for running the airline at the time.

The German court ruling carries significant weight as Air Namibia currently serves Frankfurt Int'l and therefore maintains bank accounts there.

According to court documents seen by The Patriot newspaper, Challengair's lawyers have now made good on threats to start seizing funds accrued in Air Namibia's German accounts. Late in 2018, they warned that all funds paid to Air Namibia for tickets through Europe would be blocked from November 16, 2018, onwards until the full EUR25 million had been paid off.

Air Namibia subsequently wrote to Challengair on December 7 asking that the seizures be postponed pending a meeting between the two parties in either Brussels or Germany during the first week of February 2019. The purpose of the talks was to have been to renew efforts to reach a settlement in the dispute. It had also sought to have a US litigation payment disclosed without prejudice and to discuss the settlement of two unpaid bills of cost granted by a Windhoek High Court in favour of Air Namibia.

However, Challengair responded that such a meeting in Europe would be unnecessary given it had its own representatives in Windhoek with whom Air Namibia could liase.

“Any settlement proposals must be done via Wilhelm Shali c/o [in care of] Sisa Namandje & Co and similarly all correspondences regarding settlement proposals must be sent to Sisa Namandje & Co.,” the letter read.

On January 4, 2019, CommerzBank in Germany attached approximately USD600,000 worth of Air Namibia funds while on Monday, January 21, a further USD224,000 was seized.

Other options that Challengair can use to cover the funds include grounding Air Namibia A330-200s while they are in Germany and claiming ownership of the fuel they have onboard. The two widebody aircraft themselves cannot be seized as they are the property of Voyager Aviation (formerly Intrepid Aviation). The Patriot quotes correspondence from Air Namibia stating that it has already informed the US-based lessor of the possibility of the widebody jets being grounded as a result of the dispute.

Aside from the seizure of its fuel, the grounding of the A330s would harm Air Namibia's image and standing with its passengers.

“We take the considered view that this situation is avoidable if there is a real intention to respect the Munich Regional Court of Appeal judgement on the part of the respondents and or the respondent’s shareholder,” Challengair said in a letter to Air Namibia.

Challengair also warned Air Namibia that it takes the latter's attempts at mitigating against liquidation as their concession that the airline is unable to meet its obligations arising from the German court’s judgement.

“If this is correct we will seek further legal remedies in this regard,” Challengair warned.

In October last year, The Patriot cited confidential airline documents which showed that the entire debacle had, until then, cost Air Namibia EUR3.7 million (USD4.21 million) in legal fees compared to the EUR1.9 million (USD2.16 million) racked up by Challengair.

Air Namibia has since confirmed an ongoing court case in Windhoek with the Belgians while highlighting that the recent seizures were "clearly aimed at exerting pressure" on the airline.

Following reports that its Third Country Operator's Certificate (TCO) could be in jeopardy given the financial risk posed by the lawsuit, Air Namibia said it had also started to engage the European Aviation Safety Agency (EASA) to explain to them what it said was "its current efforts to engage with Challengair".

Challengair's liquidator, Belgian attorney Anicet Baum, declined a request for comment.