Spurned Air Botswana dolls up for new suitors
Bame Piet | Friday June 16, 2017 17:28
On the business case alone, it appeared to be a match made in heaven. Air Botswana, the struggling national airline running hundreds of millions of pula in losses annually, would have piggy-backed on the whirlwind success of Wilderness Air in a homebrewed deal, glistening with patriotic pride.
To hear Transport Minister, Kitso Mokaila say it, Wilderness Air would have fit perfectly into the laid down plans to strengthen Air Botswana’s most profitable routes, which are the flights into tourism hotspots. In addition, Wilderness Air’s smaller craft would have been ideal for carving out bespoke tourist routes to further leverage the national airline’s push for profitability.
Air Botswana has a fleet of four aircraft with a combined seat capacity of 206 seats as well as a lease on a single Bombardier jet aircraft, while Wilderness Air’s 45 smaller aircraft, which fly approximately 350 people a day from major access points to camps across the region.
Last Monday morning, Wilderness Holdings CEO, Keith Vincent gushed over the tourism giant’s plans for Air Botswana and its motivations for seeking a stake in the national airline.
“It’s in our strategic interest to have a seat at the table to ensure that there’s cheap, safe, sustainable and reliable access for tourists,” he told Mmegi.
“We should be boxing everyday for better and cheaper access and if we don’t, our whole business is at risk.
“We will be happy to sit with them and work on a solution for the industry and the country.
“We are open to any type of discussions on a solution that can work.”
On Wednesday, Transport and Communications permanent secretary, Kabelo Ebineng was cornered at the Public Accounts Committee and squeezed into revealing that Wilderness Air was government’s preferred bidder for Air Botswana. At the same appearance, a Presidential directive emerged directing the Ministry to initiate talks with Wilderness.
The inevitable political storm erupted due to President Ian Khama ties to the Wilderness Holdings group and the appearance that he had usurped a procurement process to hand the national airline to an entity he had an indirect interest in. Khama has a five percent holding in the Linyanti Concession, on which Wilderness runs profitable camps.
On Friday, Wilderness Holdings announced that after ‘careful’ consideration it was withdrawing its bid. The blushing bride was once more left in tears at the altar, her fleeing would-be groom fast disappearing into the horizon.
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.
Government, like the doting father who’s daughter is again spurned in marriage, has set about dolling up Air Botswana with a recapitalisation and refleeting plan to make her attractive to new partners.
Mokaila is not impressed with the manner in which the latest betrothal was scuppered. While Wilderness chose their words cautiously in the withdrawal, Mokaila could scarcely contain himself.
“Ba ne ba sireletsa serodumo sa leina la bone, ka gore komponi ya bone e dira kgwebo mo mafatsheng ka go farologana,” he said at a televised press conference.
“Kana re ne re ise re bo re simolole go bua, lona lo bo lo itlhaganelela go tshola pitsa e ise e butswe. Jaanong ba boetse morago ba tshaba dipuopuo.”
Mokaila later told Mmegi that with the failed deal now in the rear view mirror, the focus was on returning to an International Air Transport Association (IATA)-approved blueprint to return Air Botswana to sustainability. The plan involves recapitalisation and refleeting the airline and to this end, the Botswana Public Officers Pension Fund (BPOPF) has been tapped to provide the billions required.
“We gave Air Botswana room to look for funding for its operations and refleeting and they returned and said the BPOPF was willing to talk and did not need a government guarantee, which is what other banks demanded,” he said.
“This is part of the business plan for a return to sustainability which Air Botswana produced in conjunction with IATA. We are progressing with that plan and will be looking out for partners in the meantime.”
In the short term, however, Air Botswana’s focus is on transforming into a private company, after which it will have the structure to commence negotiations with BPOPF. Although Mokaila flatly declined to reveal the amount Air Botswana will be seeking from the P55-billion strong pension fund, the figure is expected to be comfortably above P1 billion.
For BPOPF, the proposed funding marks an unprecedented change in tact, as the pension fund has heretofore not included ‘loans to parastatals’ in its investment guidelines. In fact, the pension fund’s investment guidelines are legendary for their strictness, emphasis on security and the ability for an investment to be liquidated quickly.
“It is not clear how the BPOPF would put its hand up to borrow a perennially loss-making parastatal funds, without a government guarantee, especially when these funds are pensioners’ monies that need to be kept liquid or cashable at a moment’s notice,” one analyst said of the proposed deal this week. “It could be that by transforming into a Pty Ltd with government as sole shareholder, BPOPF will be comforted knowing it is essentially parking money with government, a blue-chip borrower, at interest.
“But the BPOPF trustees must be anxious about this one.” For Air Botswana, however, the details are secondary.