An old debt to Belgium's bankrupt Challengair (1I, Brussels National) may eventually catch up with Air Namibia (SW, Windhoek Int'l) as the liquidator of the charter company has applied to have the cash-stricken flag carrier liquidated in the Namibian High Court.

The application is scheduled to be heard on October 26, 2020, confirmed Sisa Namandje, Director of Windhoek law firm Sisa Namandje & Co, who is presenting Challengair's Belgium liquidator, Anicet Baum.

He confirmed to ch-aviation that Challengair's application follows on Air Namibia's failure to pay monthly instalments on a settlement of NAD400 million Namibian dollars (USD24.2 million) to Challengair. The settlement results from a longstanding dispute over Air Namibia's lease and maintenance of a B767-300(ER) from Challengair in 1998. Namandje declined to comment further as the matter was sub judice.

The Namibian Sun reported that Challengair in 2008 had obtained a judgment from a German court, which ordered Air Namibia to pay it USD6.5 million for unpaid rent, maintenance and insurance of the aircraft. In another judgment in July 2011, Air Namibia was ordered to pay another USD13 million in interest on the outstanding debt.

Late last year, the Namibian government provided a guarantee of NAD578 million (USD34.9 million) to allow the national airline to borrow money from commercial banks and keep Challengair from effectively attaching two Air Namibia A330-200s leased from Castlelake and used on the Frankfurt Int'l route. Although the airline does not own the aircraft, Challengair can pursue the fuel they take on board in Germany effectively grounding the aircraft there.

“Air Namibia, after paying part of the instalments, has since regrettably and materially breached the agreement by failing to pay the remaining monthly instalments. It is therefore very clear that Air Namibia is not able to pay its debts as they fall due, a fact which it has readily admitted,” Challengair said in court papers filed. It claimed Air Namibia’s liquidation was in the public interest as the airline was in “deep commercial insolvency” and that government assistance was not forthcoming.

The Namibian state-carrier has to date paid EUR8.2 million euros (USD9.6 million) of the EUR18.2 million (USD21.4 million) it still owes to Challengair. However, several payments were not made in full, while another had been delayed, Challengair said.

Challengair also alleges Air Namibia had informed a local representative appointed to act as a go-between, Willem Shali, that it was unable to settle its debts. “Crucially, the (Air Namibia) chairperson, post and present acting Chief Executive Officer and the legal officer have since acknowledged to Mr Shali that (the airline) is unable to pay its debts as they fall due,” Challengair said.

The Namibian High Court, on July 9, 2020, set aside the suspension of Air Namibia’s scheduled air service licence after the struggling carrier was grounded on July 8 when the Transportation Commission of Namibia suspended its scheduled air services license (ASL), saying the airline was financially unable to provide safe and reliable commercial flights. The airline’s precarious financial situation had already resulted in the suspension of its ASL in November 2019.

The airline needs NAD8 billion (USD484.2 million) to carry on as a going concern, but has failed to produce financial reports in recent years, a requirement of Namibia’s Air Services Licensing Act. Only NAD983 million (USD59.4 million) has been made available to the airline in the last Namibian government budget, representing only 12% of the amount needed. Namibian President, Hage Geingob, in June 2020 called for Air Namibia’s liquidation, saying his government could no longer bail out its flag carrier.

Meanwhile, almost half of Air Namibia’s workforce have had their salaries slashed in half for three months until November 2020. Those affected are cabin crew, pilots and ground staff who were furloughed since Namibia introduced a COVID-19 lockdown in March. In a letter quoted by Reuters, Air Namibia Acting Chief Executive Theo Mberirua said only 57% of the airline’s 800 staff had worked in the past six months.

Air Namibia has been operating limited scheduled domestic services since May 6, but has not operated commercial international flights despite the country opened its international borders on September 1, 2020. It was scheduled to operate charter flights to Johannesburg O.R. Tambo on October 6 and 9, 2020. Domestic flights between Windhoek Eros and Walvis Bay were scheduled to restart on October 7. The airline currently operates only three out of six domestic routes (Eros to Ondangwa, Caprivi, and Rundu).

Mberirua said the restart of operations had been heavily impacted by a lack of funds to pay critical creditors and salaries. “The financial losses incurred by the airline over the previous five financial years have left (it) in a state requiring immediate intervention on all fronts,” he said, adding that fixed cost (including aircraft leases, maintenance cost, salaries, and fuel) far exceeded the revenue generated over the same period. This negatively affected the cash flow of the airline, “to the extent that continued domestic operations are jeopardised,” he said.