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Air Botswana gets P290m to pretty up for new suitors

MBONGENI MGUNI
Embrear Jet
Parliament on Tuesday approved a P290 million budget to refleet Air Botswana, required as part of plans to enhance the national airline’s value and make it more attractive for privatisation.

The refleeting will include the purchase of a 70-seater Embrear E-Jet, a class of narrow-bodied, twin-engine jets manufactured by a Brazilian aerospace group.

Last July, the airline went through a fourth bungled attempt to privatise it when tourism giant, Wilderness Holdings abandoned its takeover bid at the 11th hour.

On Tuesday, Transport and Communications minister, Kitso Mokaila told legislators the refleeting budget was required to better position Air Botswana ahead of a renewed process to private the airline.

“Air Botswana is in the process of acquiring additional aircraft to position itself regionally as well as introduce new local routes,” Mokaila said. “This is aimed at achieving enhanced revenue streams and strengthening the airline’s balance sheet.”

He added: “The investment is expected to add economic value to the government, while placing the airline on more solid ground in the ongoing journey to privatisation and maximising value to the public”.

Last August Mokaila told Parliament Air Botswana was worth P300 million in terms of its assets and property. The airline has a fleet of three ATR42-500s and also leases a Bombardier jet.

The P290 million budget will be to purchase three

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more aircraft being two ATR72-600s and the jet. Answering questions last Thursday in Parliament, Mokaila said the refleeting was a priority project aimed at “increasing Air Botswana’s intrinsic value”, ahead of the planned privatisation.

“The idea is to have an operationally efficient Air Botswana that will be valuable and attractive to potential investors.”

BusinessWeek is informed that the refleeting is part of a phased approach to privatising Air Botswana, where Phase 1 will involve increasing the airline’s intrinsic value, before moving towards a process to privatise.

Government has attempted to privatise the loss-making airline three times before, in 2003, 2006 and 2008, but the deals have fallen through each time due either to investors withdrawing or Cabinet rejecting the terms.

After the last failed attempt, Mokaila said the privatisation process would return to an International Air Transport Association (IATA) – approved blueprint involving returning Air Botswana to sustainability first, through recapitalisation and refleeting.

On February 5, Finance Minister, Kenneth Matambo told Parliament that Air Botswana’s losses had fallen to P12.7 million for the financial year ended March 31, 2017, from P86.1 million the previous year.



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