Debt-laden Air Namibia has been placed into voluntary liquidation, Namibian Finance Minister Iipumbu Shiimi has said, calling the state-owned airline "unsustainable".
The Namibian government said that it had considered all other options, which included potential investment from other airlines and turnaround strategies, before it decided to file for liquidation.
"The country's economy can no longer afford to perpetually provide financial support to Air Namibia at the expense of supporting economic growth and critical social services," Shiimi said during a news conference.
Air Namibia, which employs 644 workers, is buckling under mountains of debt. It has failed to produce financial statements in recent years despite regular state bailouts over the past two decades.
"It is therefore important for the nation to understand that the current debt of Air Namibia is unsustainable and will jeopardise the economic recovery plan," Shiimi said.
The government estimates it has spent more than eight billion Namibian dollars ($547.16 million) on Air Namibia, the minister said. The government said that it will pay Air Namibia's employees the value of one year's salary, over the next 12 months.
In a statement posted on Facebook, the airline said that it is cancelling all flight operations and suspending new bookings. The airline promised to refund customers.
ChallengeAir
The move to liquidate Air Namibia comes just after the airline signed a €10 million settlement agreement with Belgian flyer ChallengeAir.
As part of that agreement, Air Namibia will pay ChallengeAir €9.9 million, beginning with a €5 million payment before February 18 and monthly instalments thereafter until January of 2022.
Namibia's public enterprises minister Leon Jooste said the decision to liquidate Air Namibia was not motivated by the problems with ChallengeAir.
News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.
