AllAfrica.com / Charles Ozoemena
Abuja
THE Federal Executive Council rose from its meeting yesterday approving Virgin Atlantic Airlines as the new strategic/technical investor for Nigeria's new national carrier now to be known as Virgin Nigeria Airlines.

The new carrier, which takes the place of the liquidated Nigeria Airways, is expected to take off and be commissioned on the nation's 44th independence anniversary on October 1st, this year.

Minister of Aviation, Alhaji Isa Yuguda, who addressed State House correspondents on decisions of the council, disclosed the ownership structure of the new airline saying "the ownership of the new airline is 49 per cent for the strategic investor and 51 per cent to be taken by Nigerian institutional investors who will eventually let go 50 per cent of their holding and it will be sold out to the Nigerian public through initial public offer. The equity of the company for now is $50 million. Nigerian investors are going to pay in $25.5 million while Virgin Atlantic will put in $24.5 million".

Virgin Atlantic Airlines is a privately owned global airline operated by British entrepreneur, Sir Richard Branson.

Sir Branson had two weeks ago met President Olusegun Obasanjo privately at the State House Abuja. Yuguda said that Virgin Atlantic defeated the South African Airways, which in the first instance won the bid early in the year but pulled out due to the insistence of President Obasanjo that Nigerians constitute 10 percent of the workforce. The minister explained why South Africa Airways made a comeback in the latest bid explaining that South Africa re-indicated interest to bid for the second time and had to be given the chance to do so.

He said: "You will recall that negotiations broke down because of South African Airways' failure to accede to the request of our president that Nigerians should be allowed to take a stake of a minimum of 10 per cent in South African Airlways when eventually the airline is privatized. However, between the time negotiations broke down and the time we started talking to another set of investors with the support of the president who invited quite a number of them to come and bid again, South African Airlways also requested to rejoin the bid and that the president directed and graciously accepted that they should rejoin the bid because they intended to accede to the request of Mr. President".

Yuguda revealed that the evaluation of the bidders was conducted transparently, following due process. According to him "We received quite a number of expressions of interest and they were screened for the next stage of evaluation and at the final stage two airlines emerged for evaluation.

They are the South African Airways and Virgin Atlantic Airlines. Due process was followed and transparency was also followed in their evaluation. A lot of criteria were used in the evaluation. Criteria used are technical and operational competence, maintenance record, training, training aids, flight operations, aircraft acquisition strategy, global operations, ground operations and aerial and support services etc.

"Under financial criteria, they used profitability, yield management, proposed commitment to the new airline, debt profile and credit rating, cash and working capital management, insurance plan, performance in the previous experiences, ownership structure. "At the end, they came out with a score of 8.32 for Virgin Atlantic and 8.10 for South African Airways. That actually gave Virgin Atlantic an edge to invest as the technical investor in the Nigerian Flag carrier project.

"Apart from that, in the evaluation, a lot of issues were considered, particularly the strength of each of the airlines and also the weaknesses. From available data submitted to us by independent financial advisers, we have Virgin's strength, which includes superior and globally accepted brands. It has a successful track record in running joint ventures, for instance Virgin Blue in Australia, an airline in Europe and at present Virgin America. They have also in their proposal confirmed that they would use local contents in terms of domestic employment.

"Virgin Atlantic is also owned 49 per cent by Singapore Airlines, which is most reputable and preferred airline in the world. It also has a record of consistent profitability in the industry. They have also a superior maintenance record of infrastructure that is of international standard. They have a culture of entrepreneurship as opposed to the South African Airlines that is almost wholly government-owned."

He said that a letter would immediately be forwarded to the management of Virgin Atlantic while agreement would also be signed. This, the minister added is to help accelerate the process of starting operations by October 1, and also start the issuing of guidelines for offer of prospective Nigerian investors in the national carrier. But he hinted that government might underwrite the 51 percent equity if the process of fulfilling the guidelines of the Security and Exchange Commission would delay take-off. After the completion of the process, government funds would be returned.

Dismissing the agitation of the staff of the liquidation-bound Nigeria Airways against the take-off of a new national carrier, he clarified that the new national carrier is not owned by government but is just a product of private-led investment, stressing, "It is an independent airline. Nigeria Airways is a company under liquidation. Presently, a liquidator has been appointed. And it has sufficient assets to take care of the workers under the company".