Privatisation attempts
Because the airline had been regularly posting financial losses, which was in part is due to overstaffing, the operation of an ageing, fuel-inefficient fleet, increasing operational costs, inadequate management expertise and an inability to retain and attract qualified pilots, the government earmarked Air Botswana to be the first of the parastatals to be privatised. The costs which the airline incurs, in conjunction with low quality of service, poor marketing, high insurance premiums and a slow uptake on new technology, has restricted growth potential for the airline.[17][18][19] However, in the five years to 2003, the government had not had to subsidise Air Botswana, and in the previous six years had made a profit.[10]
The privatisation process began on 19 April 2000, when the government signed a consultancy agreement with World Bank-affiliated International Finance Corporation, which saw IFC being appointed as the government's main adviser in the privatisation process.[20]
In 2003, the government attempted to privatise the airline, with Air Mauritius and Comair put forward as strategic partners. The process would have seen the winning bidder receiving a 45 percent stake in Air Botswana, with the government holding a further 45 percent, and employees holding the remaining 10 percent.[21] It was planned that once the airline has firmed its position under new ownership, it would be listed on the Botswana Stock Exchange.[22] Air Mauritius withdrew from the process in September 2003, citing the downturn in global air travel markets since the 11 September 2001 terrorist attacks in New York City. Comair withdrew in December 2003, due in part to increased competition by low-cost airlines in the South African market. The government suspended the search for a strategic partner in February 2004.[23][24]
Following a P300 million loss in the first quarter of 2006, the Sunday Standard reported that the government hurriedly began efforts to privatise the airline before it became insolvent. The newspaper also revealed that the airline defaulted on its US$42,000 – 45,000 payments for the lease of the BAe 146 from April — July 2006, and that the arrears were paid once the airline's secretary and corporate counsel warned that non-compliance with the contracts could lead to the termination of the lease of the aircraft and expose the corporation to claims for damages, which would affect its image during the privatisation process.[25] In September 2006 it was announced that three potential investors had placed bids for the tender to take over the airline: Airlink of South Africa, African World Airways Ltd, and Lobtrans (Ltd), a local truck fuel transporter. Shortlisted companies which did not submit bids included Ethiopian Airlines, Comair, Tourism Empowerment Group, ExecuJet, and Interair South Africa.[26] In November 2006, the Public Enterprises Evaluation and Privatisation Agency announced that Airlink has been put forward by the Ministry of Works and Transport as the preferred bidder for Air Botswana.[27]
It was revealed by the press that Nico Czypionka, the man responsible for leading negotiations between the government and Airlink, had convinced the government as early as April 2006 to go into partnership with the South African airline. It was alleged that the deal with Airlink was a foregone conclusion from the beginning of the process, and that other airlines had been invited to submit bids to create an illusion of fair and equitable processes. The Sunday Standard also revealed that the blueprint for the privatisation of the airline was written by Airlink CEO Roger Foster, and was used by Botswana in its negotiations with the airline, in contravention of the Botswana Privatisation Policy of 2003.[28]
As part of the proposed deal with Airlink, it announced that Air Botswana would be wound up, and a new airline to be known as Botswana Airlink would be formed, with the government holding a controlling 50.1 percent share and the South African airline holding the remaining 49.9 percent.[29][30][31] The new airline would have disposed of the 46-seat ATR 42s, and would instead operate 29-seat BAe Jetstream 41s, which are more suited to low traffic domestic routes. The deal would also have seen the retrenchment of all 300 employees of Air Botswana, with approximately 180 being rehired by the new airline.[32]
The Government ceased negotiations with Airlink in October 2007, when the Cabinet reached a decision that the deal was no longer viable. A major sticking point, according to Mmegi, was that Airlink was adamant in replacing the national colours of blue, black and white, with those of South Africa.[33] The Cabinet also believed the proposal didn't meet requirements for air transport for the country, and didn't address government objectives for the further development of transport and tourism sectors in Botswana,[34] although the tourism industry regards Air Botswana's monopoly of air transport in Botswana, and the resultant high fares and limited schedules, to be a major constraint for the development of tourism in Botswana.[35]
The government then began the search for a management company to operate the company for a three-year period,[36] and also announced that the government would recapitalise the airline by injecting P100 million to improve performance and to make it more attractive for privatisation.[37] The government entered into negotiations with Comair, but following disagreements over terms, negotiations continued with reserve bidder International Development Ireland, in conjunction with Aer Arann.[38]
According to press reports in August 2008, Alexander Lebedev, a Russian oligarch, expressed interest in investing in the airline, and the Ministry of Works and Transport confirmed that Lebedev was invited to travel to Gaborone to present his bid to the government.[39] Part of the bid reportedly included extending Air Botswana's route network to Düsseldorf Airport; the base of Blue Wings which is 48 percent owned by Lebedev's National Reserve Corporation.[40] At the end of 2008, it was reported that Lebedev had abandoned plans for investment in Air Botswana.[41]
