Virgin Nigeria

[EIC]

Thread to discuss Virgin Nigeria

[panej]

"If you want to become a Millionaire, start an Airline with a Billion" The Airline industry is a money pit and things (grand scheme) didn't turn out the way Branson planned and he's looking for a way to get out and blame someone else. Unfortunately FGN is playing into his hands by not letting the legal process play out. They've been there (MM1) for at least a couple of years; a few more months (to let the appeal process which can be expedited) wouldn't have been outrageous. The last thing the NSE needs now is bad international publicity by the likes of Branson who revel in it. Capital flight is a big consequence of such negative publicity and with the stock market hemorrhaging at this rate, nothing good can come out of it.

[hispy99]

Govt, Virgin Nigeria rift: No end in sight

WOLE SHADARE writes that the seeming face-off between the Federal Government and Virgin Nigeria is yet to be over. Serious issues have been raised by the 'warring' factions.While the airline through its founder, Sir Richard Branson, said that Virgin Atlantic was at an advanced stage of selling its equity in Virgin Nigeria, there are strong indications that the airline had since March this year begun the process. While some argue that the business mogul was frustrated by government's high-handedness by not respecting 'agreements,' others simply referred what is playing out as 'pure blackmail'

One would have thought that the raging face-off between the Federal Government and Virgin Nigeria over relocation of the airline from the international wing of the Murtala Muhammed Airport, Lagos to the newly built Murtala Muhammed Airport 2 (MMA2) would have come to and end.

Recent development has proved everyone wrong, as both parties are trying to justify their actions.

Virgin Atlantic through its founder, Sir Richard Branson recently in a statement said the decision of Virgin Atlantic Airways, the technical partner for Virgin Nigeria to sell its 49 per cent minority shares in the country's flag carrier was as occasioned by the desire to allow the carrier function independently of its technical partner.

Although, Branson and a director for Virgin Group, Chief John Adebanjo said that the desire to sell its shares in Virgin Nigeria was not connected with its forced ejection from the international wing of the Lagos airport.

While Nigerian institutional investors own 51 per cent equity in the airline, Virgin Atlantic owns the remaining 49 per cent. Virgin Atlantic stated, however, that it was in talks with potential purchasers of its equity.

According to the business mogul, "Virgin Atlantic bought a 49 per cent stake in Virgin Nigeria when it was created four years ago and has since helped the airline to become the safe, reliable flag carrier for the region, helping to lay good foundations for Virgin Nigeria's continued success. Virgin Atlantic wishes to focus on growing its core long-haul business".

"It is regrettable that events have caused us to review our shareholding and whether it is appropriate that the Virgin brand should remain linked to Virgin Nigeria", he added.

Branson in the statement, reiterated that "Virgin Nigeria signed a Memorandum of Understanding in good faith with the Nigerian government in 2004 and provided all necessary documentation, as required by the government. As with every government we work with around the world, a deal is a deal and Virgin Nigeria should be allowed to operate its domestic flights from the international terminal in Lagos , which offers passengers seamless connections between Virgin Nigeria services. Businesses need stability and certainty in order to invest in Nigeria ."

He noted that since it started operations in 2005, Virgin Nigeria has been run by a local management team, based in Lagos , which Virgin Atlantic has no control over, adding that Virgin Atlantic has had no financial benefit from Virgin Nigeria in respect of leases, rental or facilities during this time.

The Federal Government had some few years ago 'begged' Virgin Atlantic to help the country set up a national carrier for her that all Nigerians would be proud of. The request came after the defunct Nigeria Airways was liquidated in what many described as a very fraudulent by the administration of former President Olusegun Obasanjo.

The airline was formed in September 2004 when the Federal Government of Nigeria announced the selection of Virgin Altantic Airways as the strategic investor and technical partner in the project.

Virgin Atlantic led by Branson visited Obasanjo in Abuja. The visit culminated in an agreement between the Federal Government and Virgin Atlantic. Not a few criticised the agreement entered into by the government, but some others were convinced that, 'agreement is agreement'.

Virgin Atlantic made it clear that they would only invest considerable sums in Nigeria under certain strict criteria. One of those was the ability to operate domestic and international flights out of the same terminal which is the only way a flag carrier of any country can operate.

A source told The Guardian that Branson had long sold the 49 per cent minority shares of Virgin Atlantic in the airline, stressing that Branson's claim at this time was very untrue.

On March 27, 2008 , Virgin Nigeria Airways shareholders had requested that the sum of $25 million to underwrite the share purchase of Virgin Atlantic's 42 per cent holding in Virgin Nigeria Airways. The facility was expected to be warehoused with an acceptable agent, after which they would be sold through a private placement. First Bank Nigeria Capital Limited was expected to act as Financial Adviser/Placement Agent, with First Bank as the Underwriter,

VNA shareholders had requested that First Bank underwrite the sum of $25 million for the share purchase. The proposed private placement was expected to inject additional cash into the business and the exercise was expected to commence within the next six-nine months. It is expected that the warehoused shares would be offered for sale during the exercise.

The sum of a N20 billion credit line was requested as contingency to refinance various facilities available to VNA from UBA Plc.

The shareholders noted, 'although we expect to share VNA's business with UBA, going forward, however, the possibility of UBA becoming obstructive to this transaction cannot be ignored. Should this event occur, we have proposed that First Bank will repay UBA and distribute the facilities and VNA's business amongst banks willing to participate.'

The company signed an MOU in January 2005 with UBA Plc. UBA Global Markets alongside UBA lnsurance Company Ltd, both member of the UBA Group; own four per cent and 1.25 per cent respectively of VNA's equity.

UNIC Insurance own two per cent of the company's equity. The company provides health insurance services to VNA's workers and their qualified dependants.

Other shareholders in the carrier are Capital Alliance Nigeria Limited (11.25 per cent), Dantata Investment and Securities Company Limited (10 per cent), UBA Global Markets (four per cent), IBTC Ventures Limited (three per cent), BGL Limited (2.25 per cent), Asset Resources and Management Company Limited (two per cent), Industrial and General Insurance Company Limited (two per cent), Leadway Assurance Company Limited (1.75 per cent) and Access Bank with (I.75 per cent).

Others are Linkup Investment Limited (1.50 per cent), IBTC Chartered Bank Plc (1.25 per cent), UBA Insurance Company Limited (1.25 per cent), African Alliance Insurance Company Limited (one per cent), Crusader Insurance Nigeria Limited (one per cent), Lion Building Insurance Limited (one per cent), Magami Holding Limited (one per cent) and Oasis Insurance Company Limited (one per cent).

Former spokesman for the liquidated Nigeria Airways, Mr. Chris Aligbe said that Branson's action was anticipated long ago.

He said that the idea of reviewing share is to "create the impression that it's being forced out of Nigeria . The Federal Government should not allow him to get away with this cheap idea, in fact the government should be ahead of him".

He asked the government to set up a committee to find out how much Virgin Atlantic actually invested in Virgin Nigeria.

A London based respected aviation consultant, Mr. Nick Fadugba also disclosed that Branson intends to reduce stake from 49 per cent to seven per cent, stressing "we predicted in 2005 that the joint venture will end in tears".

[hispy99]

Knocks Trail Virgin Nigeria's Threat To Downsize

NAMA insists On Nigerian Airspace Safety
By Emma Eke
THE threat by the management of Virgin Group, owners of Virgin Nigeria to reduce its stake in the local airline had attracted condemnation from experts and stakeholders in the sector.

Following the row generated by the Federal Government directive that all airlines operating at the international wings of the nation's airports should relocate to the local wings, the Virgin Group, Virgin Nigeria's foreign partner reportedly indicated its intention to reduce, by 40 per cent, its investment portfolio it unless government reversed itself.

However, other aviation investors had insisted that the alleged reaction by the Group was not in good taste.

Said Caption Kola Adewumi, a former senior pilot with now rested Nigeria Airways: "Those, who know the industry very well understand such as unnecessary grandstanding. Given the fact that Nigeria is not bereft of both local and foreign investors in the sector for now; if Sir Richards Branson, Virgin Group chairman, is correctly quoted to have issued such a statement purportedly threatening reducing his concern in Virgin Nigeria, he should give a better reason for wanting to wind down and definitely not on the operational base."

The Airline Operators of Nigeria (AON) said that it would not be good for government to contradict itself by allowing only one operator to remain at the local wing of the Murtala Muhammed airport, when other had complied with the order.

Meanwhile, despite concern shown by the Airline Operators of Nigeria (AON) on the state of the country's navigational aids, Nigerian Airspace Management Agency (NAMA) has declared that the nation's airspace is safe for airlines to operate in.

The operators had recently called on the authorities concern to ensure that all navigational aides in the functional airports are put in proper shape to reduce check air mishaps.

But NAMA's General Manager, Public Affairs, Supo Atobatele, in a statement said that a foreign firm had calibrated all the navigational aids at 14 airports across the country, with each of them passing mandatory test after a rigorous four-week exercise.

"This brings to two, of such calibration exercise this year while another one has been slated for this November.

"For avoidance of doubt, over 500 airlines fly in the country's airspace daily and it is therefore absurd for members of the AON to keep on asking for start ups at various airports on daily basis when in their own 'wisdom' know that the sky is not safe for them," he stated.

Atobatele said that his Agency, as part of its drive to stabilise communication facilities had acquired some High Frequency (HF) radios, worth about N15 million for installation at 15 airports while the Aeronautical Fixed Tele- Communication Network AFTN between Lagos and Kano airports had been resuscitated to improve voice and data communication transmission.

[billions]

Virgin Nigeria row a cautionary tale for investors
26 August, 2008 02:00:00 Anonymous
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Little could he have imagined that three years later, with a new Nigerian president in power, an acrimonious row with the authorities would break out over whether the terms of the agreement he struck were still valid.

Virgin Nigeria, in which Branson’s Virgin Atlantic has a 49 percent stake, was launched to great fanfare in 2005 under then-President Olusegun Obasanjo, an economic reformer with whom the British tycoon enjoyed close relations.

But Umaru Yar’Adua took office in Africa’s top oil producer more than a year ago and his administration has been busy scrutinising contracts struck under his predecessor.

From oil giants Royal Dutch Shell and Exxon Mobil to China’s Civil Engineering Construction Corp (CCECC), the terms of deals with major foreign investors are coming under the spotlight. Relations with Virgin have soured considerably.

"Over the years, public officials hardly bothered about the interest of our people when entering into contracts and agreements on behalf of the government," presidential spokesman Olusegun Adeniyi told a local newspaper last week.

"But with Yar’Adua many things are going to change ... under his watch, while we want foreign investment and would respect the sanctity of legally-binding contracts, he will not allow a situation in which our country continues to be short-changed."

Foreign direct investment soared to over $5 billion in 2007 from barely a fifth that in 2000, according to World Bank data. Nigeria has also been central to the portfolios of investors seeking to profit from Africa’s fastest growth in decades.

Virgin’s row is ostensibly over whether Virgin Nigeria can continue to use the international terminal at Lagos airport for internal flights rather than the domestic one, built by businessman Wale Babalakin.

Virgin wants an easy connection for passengers in transit from its lucrative London-Lagos flights to Virgin Nigeria’s routes within the country. The government says Virgin Nigeria must use the same domestic terminal as other internal carriers.

But the spat is about more than airport logistics.