Tuesday, July 7, 2020

One Step at a time, Air Botswana privatisation take shape

The privitisation of the national airline – Air Botswana which has dragged for over a decade now, seem to be taking shape as finilisation of the company’s constitution is at an advanced stage. 

The Minister of Transport and Communications, Thulaganyo Segokgo this week, told Parliament that the privitisation which is led by  Public Enterprises, Evaluation and Privatisation Agency (PEEPA) and Deloitte Consulting as transactional advisor; has progressed well through phase one and that Phase two stage will soon commence to round up the strategic choices for the shareholder, which is government. 

Presenting his committee of supply speech, Segokgo revealed that, “Deloitte is expected to deliver the final draft report for the review of Air Botswana strategic, operational and financial by 30th March 2020. This will advise on changes required to position the airline and operationally sustainable enterprise in the short term pending the privatisation of Air Botswana.” 

The national airline has since embarked on a restructuring project following a benchmarking exercise that was undertaken as part of migration of best practice in the industry. The focus of the project is to optimize the level of resources being deployed against the fleet in operation to a level where the business remains sustainable and operationally efficient. In addition to this, Segokgo indicated, “Industry averages is 50 personnel per aircraft and the current staffing levels, Air Botswana is over indexed at 150 employees per aircraft. The project costs are estimated at P15million. “

Currently, the airline has a total staff of 427 and the ongoing organisational restructuring exercise is aimed at reducing the airline to 210 staff, consistent with practice in the industry. 

The restructuring project is also aimed at setting up a ground handling company, which the Minister said is already done and transferring 135 employees to it; “majority of these staff being porters and aircraft cleaners. Retrenching 99 employees across the airline, both in Botswana (69) and South Africa (30).”

In addition, still in Parliament this week, Tshekedi Khama, member of parliament for Serowe West, asked Minister Segokgo on the period of Air Botswana turbulence and increased losses and whether there have been any salary increases for the General Manager and members of the Executive Committee.

Air Botswana recorded losses amounting to a P146 million in 2010, which losses increased to a P165 million in 2015. The airline then experienced decreases in losses, recording losses of P12 million in 2017 and P45 million in 2018.

According to the Minister, the airline, despite its operational challenges, has been able to finance its operations and only request for project funding from Government such as for the refleeting project.

With regards to turbulence, Air Botswana has had turbulent times mainly characterised by governance’s challenges. In particular, Air Botswana operated without a board during the period December 2015 to February 2016. The airline was also subjected to a period when the ministry of transport contended with the Ministry of Environment, Wildlife and Tourism over responsibility for the parastatal. In particular, Botswana Tourism Organisation (BTO) appeared to have been given responsibility by the then Minister of Environment, Wildlife and Tourism to carry out due diligence on the airline by engaging Comair company. Indications from Minister Segokgo’s submission are that, the General Manager and the entire staff have been getting annual inflationary adjustments, which have not been automatic until the board in 2019 approved that inflationary adjustments in line with government should be effected, subject to funding availability.

Currently, the gross monthly remuneration for all Air Botswana directors, including the general manager is P718,900.00. 

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