Ghana Airways seeks way out of crippling debt

Ghana Airways is heavily in debt and may team up with a foreign carrier to avoid becoming the latest in a string of failed airlines, board chairman Sam Jonah said on Wednesday.

Jonah said the state-owned airline, created 45 years ago when the West African country won independence from Britain, has debts to the tune of $160 million.

The board was studying joint venture proposals from a Swiss-British company called Triaton and from Beirut-based T&E Aviation, said Jonah, who is also chief executive of Ghana's biggest company Ashanti Goldfields .

He gave no further details of the potential partners.

"There aren't any soft options. Any day, any of the creditors can bring this ship down. Let's not kid ourselves, every day the airline takes off, the debt deepens," Jonah told reporters in the Ghanaian capital Accra.

A string of indebted international airlines failed late last year after the September 11 attacks on the United States brought a sharp drop in demand in air travel markets.

African airlines were largely immune due to their relatively small exposure to the U.S. market, but the fall-out in the industry increased difficulties for airlines shouldering heavy debts as concerned creditors squeezed them for repayments.

Multinational carrier Air Afrique, owned by 11 former French colonies, collapsed under debts estimated at up to 180 billion CFA francs ($260 million).

Jonah said that if the government did not want a tie-up with another carrier, it would need to recapitalise the company or could convert an $80-million government-backed loan into equity.

"Then we could perhaps go to a bank and see if they can match it with another loan," Jonah said.

But he said the situation was urgent, adding that a creditor in Britain had seized one of Ghana Airways' planes at Heathrow airport last month under a London court order.

"They let it go only after we managed to pay one million dollars. But at the end of this month we have to cough up $1.5 million, and then next month too, and frankly we don't know where we're going to find it," he said.

Ghanaian government officials declined comment on Jonah's proposals for the airline, which flies to over a dozen destinations in Europe, North America and West Africa.

With five aircraft and 1,407 staff, Ghana Airways has a high staff-aircraft ratio of 282, compared to 199 at Dutch carrier KLM and 167 at British Airways, Jonah said.

Jonah is no stranger to dealing with debt; Ashanti almost collapsed in 1999 due to heavy hedging book losses.