Government not ready to recapitalise Air Botswana

Boitshepo Majube | Wednesday February 5, 2014 15:15

 

 

 Expectations have always been that the parastatal would be recapitalised in preparation for possible privatisation.

In an interview with Mmegi Business yesterday, Minister of Transport and Communications, Nonofo Molefhi said the cash injection into Air Botswana, announced in Monday’s Budget Speech, will not be used to buy new aircrafts but to support management costs.

“Currently there is management evaluation going on at Air Botswana, and the funds are meant to assist in that regard,” Molefhi said, pointing out that to buy new aircraft needs more money than P330 million. Last year Molefhi stated that government was paying a management consultancy fee for Air Botswana.

Molefhi also stated at the recent Hospitality and Tourism Association of Botswana (HATAB) conference that they are looking at helping Air Botswana to overcome its challenges, and compete in the market. President Ian Khama has also recently said the government would have to help Air Botswana with cash injection in order to keep it afloat. Khama said despite the airline making losses, other sectors of the economy are hugely benefiting from Air Botswana.

He explained that the airline industry across the globe is struggling, and Air Botswana is no exception. He said losses made by the airline must be brought to minimal costs. 

The national carrier has for a long time been grappling with financial and operational challenges due to ageing or shortage of aircraft and poor management. Late last year, the Acting Managing Director of Air Botswana Joe Motse said government has pledged to re-capitalise the state-owned airline. Motse said at a press conference last year that the re-capitalisation would help to increase and augment the fleet.

Recently, an official in the Ministry of Transport and Communications told Mmegi that Air Botswana needed to replace its current fleet.

“Air Botswana needs to re-fleet and replace the current aircraft they are using with new jets that are suitable for the air transportation business,” he said. The official said a strong Air Botswana would help the country in its quest to become a transport hub in the region.

Presenting the 2008 budget, then Finance Minister, the late Baledzi Gaolathe, announced that the government had set aside P103 million to re-capitalise Air Botswana.

The funds were meant to cover the costs of overhauling the French-made ATR aircraft and disposal and replacement of the loss-making British-made BAE 146-100 plane, improvement of staff salaries and hiring a management contractor. Gaolathe announced then that the airline had recorded a P15 million net profit for eight months up to November 2007, as compared to P39 million in the year to March 2007.

Due to fleet challenges, Air Botswana was recently forced to combine flights to transport passengers to various destinations in the country. European aircraft maker, Airbus recently released new catalogue prices of its commercial jets - with the biggest passenger plane, the A380 nudging up to $389.9m (£251m).