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Why Nigeria Has Failed at 10 National Carrier Attempts by @dondekojo

Something new for you as Nigeria launches a new National carrier. Full credit goes to the author of this thread.

We have failed in 10 attempts to have a National carrier. What happened each time? THREAD!.


Nigerian Airways 2. Air Nigeria (Capt Joji) ” 3. New Co 4. Air Nigeria again (Kema Chikwe) 5. Nigerian Global. 6. Nigerian Eagle 7. Virgin Nigeria (Branson /OBJ) 8. Air Nigeria (UBA) 9. Nigerian Eagle (Jimoh Ibrahim) 10. Nigeria one (Odua)

First One – NIGERIAN AIRWAYS. After independence, We bought out the equities of Elder-Dempster and British Overseas Airways Corporation (BOAC) in the then West African Airways Corporation (WAAC). It was renamed “Nigerian airways” in 1971.

Well, Nigerian airways lasted for about 40 years. Local and international flights to West and Central Africa. It also operated intercontinental flights to Europe, USA, Middle East and Asia.


It was fully owned by Government with supervision from relevant ministries. Government paid the debts and subvented /determined it’s routes.


Civil Servants and the Military used its services at will and engaged the airline in rescue operations, pilgrimages and missions without payment. Beginning of the problem.

Then they started trading the call sign to private airlines, usually for Hajj operations so the huge over-flight, landing and parking charges were left for Nigeria Airways to settle. Too much oil money.

Virtually, all the F27 and F28 work horses of the airline were either sold or given away to some African States by the Federal Government in a show of big brotherhood. We lent a lot to help the apartheid struggle in SA too.

Biggest impact was during IBB’s SAP. Huge devaluation. Airways couldn’t need foreign obligations. We owned IATA clearing house almost $50m. This led to the expulsion from the clearing house meaning we couldn’t fly to a lot of places or connect airlines.

Around 88. IBB sets up task force, they recommended privatization. Nothing happened, the task force basically became the board of the airline.

One story is on how the task force tried to introduce a computerized check-in system for two prime international routes; London and New York because of boarding pass scams. Unions disagreed. Program kicked off on a Friday, by Sunday, computers were burnt.

They returned to manual check in until it’s demise in 03′. OH- Supervising minister fired entire board for increasing ticket prices in 91′.

Anyway, OBJ came in, cancelled the Nigeria Airways/British Airways JV that was a cash-cow, yielding Nigeria Airways N100million net monthly mostly because Minister wanted to collapse the airline and float her own National Carrier.

Anyway, OBJ came in, cancelled the Nigeria Airways/British Airways JV that was a cash-cow, yielding Nigeria Airways N100million net monthly mostly because Minister wanted to collapse the airline and float her own National Carrier.

Within that story. Capt Joji headed a privatization team in 1991/92 after the task force recommended privatization.

Plan was that Nigerian airways will fly international routes with the government holding 40% equity, technical partners – Swiss Air and Sabena 40% and remaining 20% would be sold to the public and staff. Union and aviation minister disagreed and fought it.

Pension and Gratuity liabilities worth, as at 1993, N489,526,000 couldn’t really be paid. They had to lay them off and hire new staff. Head of state realized the political problem and traded the CEO position to the Senate President (who was interested in the bid)

It was around the time UK privatized BA during Thatcher’s regime. We wanted to duplicate that. New CEO frustrated efforts as he really couldn’t realistically sell to Senate President. Then the Yoruba adage about the rat and cheese happened.

Third installment – NEWCO. World Bank engaged Obasanjo in 1999 to privatize the airline. Obasanjo then signed an agreement with IFC (International Finance Corporation) the investment arm of the WB

Name of new Airline was going to be NEWCO. OBJ agreed but… Atiku was head of Council on Privatization (NCP). IFC was supposed to review, Value and implement the sale.

IFC started work with Atiku’s team that included El Rufai (BPE) and Agagu (Kema Chikwe’s successor). After 1 year of study and analysis. WB proffered 3 solutions. Sell to NEWCO Liquidate the airline via court process Long-Term Turnaround and subsequent privatization.

Same IFC then pulled the latter 3. Because Turnaround will involve too much money that could be spent elsewhere in the ailing economy and liquidity could lead to serious economic loss. So one option – Sell to NEWCO.

They advised that That 5 key routes – US, UK, Netherlands, France and Saudi Arabia be reserved exclusively for the “New Co” for 5 years. That Government shouldn’t give the new company more than $2m because of existing liabilities and union action.

Government accepted this. Then the rumors started. Some accidental civil servant guy went to tell OBJ that Atiku owned NEWCO and wanted to buy the entire thing. OBJ got furious. Didn’t care if it was true. AP scandal was still fresh. He scuttled the planned sale.

OBJ’s anger led him to chaise further funding instead selling to what could be Atiku’s company (unconfirmed) got $30m from AFREXIM and signed open skies agreement with US. Atiku’s privatization Comitee practically wrote an open letter to President. E nor green.

IFC withdrew their recommendation and World Bank left. OBJ set up the Aboki Zawa Committee on Nigeria Airways, which sacked over 1000 staff, including top Pilots and Engineers that the “New Co” would have needed.

Oh BTW, they had already lured 100 graduates to new jobs – but that’s another entire thread for another day(for people that will get a job at this new carrier lol).

So After the victory over IFC,WB NEWCO and the touted hope of Atiku to acquire Nigeria Airways. OBJ set out to float a new carrier. Air Nigeria.

Like today, The floatation process was carried out in a shroud in London. The core investor was “Air Wing Aerospace”, a Special Purpose Vehicle incorporated in UK with one British Pound as paid-up equity.

Like today, The floatation process was carried out in a shroud in London. The core investor was “Air Wing Aerospace”, a Special Purpose Vehicle incorporated in UK with one British Pound as paid-up equity.

These guys had no start up fund, they came within any ability to attract investment. Somehow they sweet talked their way into having 40% equity of Air Nigeria.

Minister started to realize the Fuck up of this company that was only incorporated two months prior. What do you do when you Fuck up?

Well, Air Wing Aerospace was handed over six Nigeria Airways prime properties by the Minister as collateral to raise start-up funds from Nigerian banks.

Without even an Air Transport License, let alone an aircraft, acting on the order of the Minister, the NCAA issued an Air Operating Certificate – AOC to a non-existent airline in the name of “Air Nigeria” Think the head then was Engr Oyudo

International community got angry ICAO threatened Nigeria. Reps got involved, invited the investors for a public hearing then they turned it to OBJ Vs Na’abba and started fighting on National TV (another long story tbh)

Anyway, when the threats from International community got real. They killed that pipe dream but Kema Chikwe was not done. Oh she doesn’t give up.

Minister moved to the next round of floatation. This time called “Nigerian Global” plan was to have a foreign core investor that would hold 49% equity while Nigerian Institutional and Private investors would hold 51%.

She eventually announced the technical partner and core investor as Triaton A.G. of Switzerland. At least these ones had a company profile. She announced that NCP (Atiku)and BPE (El Rufai) had been. Brushed aside by orders of OBJ.

But… New Investors wouldn’t commit unless she liquidates Nigerian airways. One problem, it was too close to elections to do this.

But the Minister and OBJ really wanted the airline to fly before elections (but the time was too short for any profession liquidation and then floatation).

So, without any AOC this time, she leased a 20-year old Airbus, put a sticker on it with a “Nigerian Global” logo and sought an approval from NCAA for a technical landing.

Then, one day, the Minister gathered the media at MMIA to welcome Nigeria’s new National Carrier, the “Nigerian Global”.

The rickety airplane flew in and the media was awash with new headlines, the likes that you’ll see tomorrow “Enter, Nigerian Global”

But Atiku doesn’t give up easily. See, she did the Media Paparazzi before getting any FEC approval. When she wrote the memo seeking approval, Atiku already had Danjuma, Ciroma, Oshiomole and Nnorom ( Aviation union head) on his side. They all shot down the proposal

It was OBJ’s last FEC in the first term, he was cornered and had to listen. Agreed to shoot it down Nigerian Global died. 5th attempt

Then… OBJ won second term. Iya won. He appointed Isa Yaguda as Minister of Aviation with the mandate to float a new national carrier. At least they had time now. Yaguda immediately hired Bismark Rewane as Financial advisor. Great team right?

Well, Yaguda realized that they didn’t have the technical know how to do this, so he proceeded to advertise for bid for a Technical Partner cum Core Investor. At the end of it, only South African Airways bidded.

While Yaguda and Rewane were trying to get the South African team on board, OBJ already had other ideas he didn’t reveal to the minister.

Anyway, Yaguda got some technical experts from British Airways in. They proceeded to pay a courtesy call to OBJ. The British Promised you help the Minister with the floatation of the new Airline “Nigerian Eagle Airline”

According to Villa rumors, OBJ simply said “Which airline” which airline”? Mr. Minister, I don’t think what you are doing will work. Boom! Despite hiring Rewane and getting SAA and BA on board… Welp.

wo weeks later, OBJ appeared on NTA and presented a miniature prototype of an aircraft with the logo of “Virgin Nigeria” – Richard Branson was standing beside him. Exit Nigerian Eagle, Enter — Virgin Nigeria.

I know this is the one you really want to read. What happened with Virgin Nigeria, is Branson a scammer or Did Nigeria scam him? Views here maybe subjective as I disagree with some things Branson wrote in his book and also with OBJ. Anyway here is-

Virgin Nigeria was the 7th attempt. Branson came in 2004. After the theatrical Villa presentation of the miniature aircraft bearing the insigma of Virgin Nigeria by OBJ and Branson, they signed MOU.

Operations didn’t start until a full year after in 2005. Under the terms, the Virgin Group led by Branson was given a free hand to design and determine the structure of the airline even when its equity was to be 49% against Nigeria’s 51%.

Virgin Nigeria was given the right to all Nigeria’s 64 BASA then and first option of choice on any new BASA. In addition, Virgin Nigeria would operate all its domestic flights from the international terminal of MMA where the “E” Wing was redesigned for Virgin Nigeria.

The objective was to facilitate easy transfer of Virgin Nigeria passengers booked for international flights onto Virgin Atlantic; the Group’s flagship in which Nigeria had no interest.

Isa Yaguda and Rewane were retained as consultants. Rewane still tried to be the financial adviser but from the deal, you can see Branson had better lawyers and got the Better deal.

There was no board. the entire Management was drawn from the Virgin Group,the only Nigerian brought into the Management on a façade was Larry Agose for PR.

UBA was both the Airline’s Banker and a Co-investor. Was UBA’s first time in aviation.

When details of the deal broke, people started protesting. Aviation activist, Capt Jerry Agbeyegbe went to court, seeking to stop Virgin Nigeria, but four days to the case coming up, Agbeyegbe was murdered in cold blood.

Anyway, operations started with the two partners having different hopes. Branson wanted it to be a feeder to Virgin Atlantic’s international routes wile FG hoped he’d fly international routes and break BA dominance.

Branson built great Infrastructure for airline operations and achieved dominance on the domestic and West Coast routes where it was first choice.

FG heaped pressure on them to fly international routes which Branson had no intention to do because… Virgin Atlantic. Eventually they started flights to London, Dubai and Johannesburg.

Branson ensured that these routes were shoddily operated with a rickety B767 as against the modern A330 it was using for Virgin Atlantic.

So, he created conditions for poor patronage, hence poor revenue and operational losses. Just to make an excuse to pull out from those routes.

The Problem with this tactic? He had local funding – UBA. Virgin was borrowing heavily from UBA to fund this. Between 05/06. UBA approved a four-month bridging loan of US$20miilion as working capital, financing and aircraft guarantee.

Then another $40m in 2006 and yet another $100m zero coupon bond issue. There is also the $100m facility from AFREXIM Bank, obtained by UBA on behalf of Virgin.

But UBA couldn’t carry the debt burden anymore, they stopped granting loan. So Virgin moved to GTB. They sought a facility of $15m.

The entire GTB affair was a criminal act that someone should have gone to jail for.

As at the time that Virgin sought the facility, all the assets of Virgin Nigeria were encumbered in an unperfected “All Asset Debenture” instrument held by UBA as security for the $200m loans.

Virgin not only concealed this fact from GTB, but presented some of the same encumbered assets to the bank as collateral for the $15m facility.

Now I don’t want to share personal opinion on this because it’s tough to agree that 1. GTB did not know the encumbered assets in a $200m loan. Is industry that big?

Immediately GTB granted the facility, UBA perfected the “All Asset Debenture”, which included uncalled capital, and then GTB’s $15m absolutely unsecured.

When GTB realized this (duh!) they had no option but to approach the court to force payment. Lol.

Well, that money is now a part of the 35bn debt stock of Virgin Nigeria held by AMCON, which Nigerian tax payers have to liquidate. Una go liquidate this one sef calm dan

Whew. We have to continue later o

By 07/08. Branson and Virgin group were already complaining about viability of the business. Serious rumors that they were planning to exit the scene for good.

UBA Capital moved to plan B. They planned an IPO that was supposed to fetch them about $450m. But when the board saw through it, they approached the court and botched the IPO.

Virgin then got its bankers to arrange a two year convertible bond of $100m. Once that was available. UBA took 20m upfront as interest and charges.

Virgin Group took $35m to cover its equity contribution for its 49% stake in the airline and for brand royalty fee for Virgin Nigeria’s use of its brand). The Group claimed it was for lease rental payment.

Once Virgin got this money, having recovered it’s investment, it withdrew from Virgin Nigeria and recalled entire management team(all made up of the Group’s staff) in June/July 09.

Virgin then demanded, under a threat of litigation that its brand be immediately taken off from the airline. This exit left the entire burden of the airline on UBA which provided all the funding with the exception of the $15m from GTB.

So Virgin left Nigeria with 35.5bn debt (debt that even Nigerian airways couldn’t incur in its previous 10 years).

they left without adding any value to the industry, no trained manpower, no assets; aircraft or structures… Lessons? Low capitalization, opacity, lack of due diligence and quit gain aspirations and more.

Basically by the equity structure, just like this one it wasn’t a national carrier but a private Nigerian flag carrier that appropriated common wealth for concessions (that were only revealed later)

Virgin left a debt burden of US$250million, had placed an order of 10 Embraer models 170 and 190 worth US$450million and with an option of additional 6.

It had a negative capital and zero cashflow and one of its B737 that went for a C-Check was grounded in Europe for the airline’s inability to pay US$1.4million for the checks.

At the time, Virgin had become a toxic asset. UBA’s “All-Asset-Debenture” was hollow as the airline had no asset since all its aircraft were on lease. The order of 10 Embraer was a smart move to create an asset base on which the Debenture would sit.

So, the NCAA wanted to pull Virgin’s AOC but the COO Capt Dapo Olumide wasn’t ready to lose his job, he used his contact to retain Ethiopian airlines as technical partners. UBA hired him as managing director for the efforts.

Liabilities were transferred to UBA Capital to save UBA from Lamido Sanusi’s consolidation (another long story). Anyway Capt Olumide negotiated new lease agreements and priced the incoming planes down.

Capt Olumide approached UBA for $70m to complete the turn around. They turned him down because at this point they just wanted to sell the liabilities. Olumide didn’t smell the coffee until…

As a part of his efforts, he tried to register a new name for the airline, “Nigerian Eagle” but the CAC rejected him. Guess who was the Chairman of the Coporate affairs commission then? Enter -Jimoh Ibrahim.

Jimoh Ibrahim who was the Chairman of CAC , was already in discussion with UBA to buy over the assets.

Jimoh Ibrahim’s choice name for the airline was “Air Nigeria” of course he quickly got it registered. UBA was willing to sell and Jimoh Ibrahim and his faceless investors were willing buyers.

Capt Olumide didn’t know that he was a mere transitory manager while driving the turn around. He woke up to the news of Jimoh’s purchase. He simply walked away from everything.


Credit: Ayobami; @dondekojo on Twitter





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