Air Botswana faces �financial meltdown�
Staff Writer | Friday February 21, 2014 16:48
“It is recording financial losses and faced with customer dissatisfaction resulting from schedule disruptions,” the ministry said in the draft 2014/15budget estimates currently before legislators.
“As a result of the foregoing, a management consultant has been engaged for the provision of consultancy and implementation services for turnaround in certain areas of operations.”
In his recent budget speech, Finance and Development Planning minister, Kenneth Matambo announced a proposed “cash injection” of P330 million to Air Botswana in the 2014/15 financial year.
Transport and Communication minister, Nonofo Molefhi later told BusinessWeek that the cash was not for re-fleeting but for “supporting management costs”.
“Currently there is management evaluation going on at Air Botswana, and the funds are made to assist in that regard,” Molefhi said, explaining that re-fleeting would require substantially more than the proposed cash injection.
The draft budget estimates indicate that legislators are being asked to approve P340 million to “subsidise the daily operations of Air Botswana”.
“The government has decided to continue with the interim arrangement to support the recapitalisation and restructuring of Air Botswana,” the estimates note.
According to the document, the Ministry of transport and communication is proposing to raise Air Botswana’s cash by diverting development funding from secondary roads, bridges and weigh bridges construction.
This week, Air Botswana officials told BusinessWeek that the airline would also place more focus on cargo handling, as part of a new strategy scheduled to be completed by year-end.
The emphasis on cargo handling is designed to be part of the airline’s efforts to diversify its income away from dependency on passenger transportation, whose profitability has been eroded by competition, capitalisation issues and fleet challenges.
The airliner recently announced that its ‘strategy was to fully develop its cargo handling capacity,’ adding that ‘already, a tendering process has commenced for the supply of cargo handling equipment’.
Air Botswana has also taken occupancy of the new cargo shed at Sir Seretse Khama International Airport (SSKIA).
“The medium to long-term plan is to source an operational partner for operation of medium to long haul services,” Air Botswana spokesperson, Thabiso Leshoai told BusinessWeek.
“This will also be addressed in the next strategic plan. The new strategic plan is due for completion by the end of 2014 when the current plan elapses.”
Leshoai revealed Air Botswana is currently working in partnership with various airlines around the world through special pro-rata agreements. “Some of these include SAA, Delta Airlines to name a few,” he said.
Leshoai noted that the aviation industry is very competitive, following the liberalisation of the skies, and there are no guarantees for success. “Air Botswana views this as a welcome development for the growth of the industry that will undoubtedly bring in more carriers to even more destinations,”
Leshoai stated.