General News of Tuesday, 13 July 2010
Source: Daily Guide
Ghana International Airlines (GIA) is gradually collapsing as government has decided not to fund its operations.
The airline, established in 2005, has not paid the salaries of its staff for about three or four months as a result of the support freeze. And what is puzzling is the fact that Government has refused to allow interested investors to assist the airline.
At a press conference on Friday in Accra, Sylvia Lawson, Revenue Accounting Manager of the airline, said Government’s release of funding to GIA in tranches has affected the operations of the airline since its inception.
GIA, she noted, initially requested for $55 million as part of the original business start-up, but Government provided $4.9 million while the minority shareholders provided $2.1 million. Funds invested into the business stood at $7 million leaving a wide difference of $48 million.
“There has been a significant cash flow challenge ever since and as a result of the manner in which the support to the airline is released; we have found it very difficult to execute the company’s business plan,” she stressed.
She explained that the previous government invested an amount of $46.7 million between January 2006 and December 2008, noting that $16 million was obtained from the Social Security & National Insurance Trust (SSNIT).
In the case of the incumbent administration, she said it provided $16.6 million between January 2009 and April 2010, stressing that Government has provided a total amount of $63.3 million to GIA.
“Government knows that it does not have the means readily to support the airline but it will also not allow other people who are interested in investing in the company to do so.
We just don’t understand the execution of this deliberate plan to wind up GIA,” another aggrieved senior staff person, who pleaded anonymity, told CITY & BUSINESS GUIDE in an interview. Since May 8, 2010, the airline has had no flights.
He also revealed that a chunk of GIA’s market was in the Ghanaian community resident in the UK and therefore such a development did not augur well for the airline. “We have suspended sales of our tickets because we could not serve passengers who we booked earlier.”
In addition to the above-mentioned problems, GIA has had to pay GH¢120,000 in hotel bills for affected passengers. The airline has been served with an ejection notice which expired on June 30. It is also contemplating the payment of some $62,000 due to a problem it had with passengers recently.
“Investors cannot take equity stake in GIA because of the shareholder disputes with Government which owns 70 percent shares. What Government needs to do to solve the shareholder impasse is to convert its loans into equity and offload part of it to any willing investor so that it can recover every pesewa of the taxpayer’s money.”
The airline has been victim to a series of seizures from aircraft owners and fuel providers to whom huge amounts of money were owned.