Govt Withdraws From Nationwide-Ghanair Deal

The government on Wednesday announced that she has withdrawn from the joint venture partnership it sought to reach with Nationwide Airlines of South Africa who was unable to meet some requirements.

Dr Richard Anane, Minister of Roads and Transport told a press conference in Accra that the government, in its quest to salvage the national Airline from near collapse initialled a non-committal memorandum of understanding with Nationwide to meet five requirements as a pre-condition for further
negotiations.

However, the Board of Ghana Airways (Ghanair) advised the Ministry late January this year that the business plan submitted by Nationwide did not meet the requirements.

The business plan was one of the five requirements, which the prospective joint venture partner was expected to prepare at its own cost to guide the venture.

The others required the partner to assist government establish a debt restructuring agreement with creditors, make available experienced managerial and technical services.

It was also to provide all the seed capital in the initial start-up phase and make available such aircraft and other equipment as required to operate the agreed service schedule.

Out of the five, Nationwide could not meet the requirement to provide all the seed capital for the initial start-up phase of the joint venture company and the assistance required for the government to put in place a debt restructuring agreement with creditors.

Dr Anane said Nationwide has been duly informed of the decision.
The government opted to go into a joint venture partnership to restructure Ghanair as recommended by a diagnostic study report that advised it to salvage the airline through three options of total liquidation, a turn
around and a joint ventureship.

According to the Minister, the first two options would have obligated government to pay off the existing debt of 167 million dollars.

The second one would in addition require re-capitalisation, which he said "would have been too much for the government to bear considering other competing priorities."

Explaining the rationale that informed government to choose the joint venture, Dr Anane said: "The joint ventureship option was selected to ensure the injection of private capital, management expertise and operational efficiency, which are, accepted industry practices worldwide into the management and operation of the airline."

Dr Anane explained that given the sensitivity of much of the commercial information on Ghanair and that unsolicited offers had been made even before the government had finalised its options, a decision was made to seek targeted offers and to open the offers.

Some major airlines the government approached, such as KLM, British Airways, Alitalia and Continental however did not yield any results.

Dr Anane said some investors and other airlines both local and international, including T and E Aviation, Traition, South Africa Airlink, Execujet Airlines and Nationwide also approached the Ministry with proposals.

The would-be partner was among other requirements expected to access aircraft of acceptable standards, provide acceptable under-wing and over-wing service standards, have capacity to train staff, especially, cockpit and cabin crew and be traceable.

Nationwide met the preliminary requirements from proposals it submitted to the Board and Management of Ghanair and the sector Ministry and also shared the vision to create a sub-regional hub, hence the signing of the abortive MOU.

Dr Anane however, said that government pursued some restructuring measures in the Ghana Airways while the negotiations were going on.

This has so far yielded positive results with the Airline being able to pay 20 million dollars out of the 167 million dollars it owed creditors since July last year.

The airline was recording a monthly loss of one million dollars before the restructuring measures and has in addition been able to ferry the DC 10 aircraft grounded for more than 15 months to Italy for refurbishment and other maintenance needs.

The aircraft was grounded due to Ghanair's inability to meet part of a contractual obligation.

The Minister said before July, he had had debt countless sleepless nights as a result of the airline situation and the pressures from creditors.

He said the sleepless nights have ceased following the turnaround in the airline's business and negotiations with the creditors, which was never done before July.

He said: "In the light of the recent stabilisation of the company, the board has advised that the Airline should be re-positioned before further consideration for possible ventureship or alliances.

On the question of the inability of Ghanair to pay salaries of workers at the close of last week, Dr Anane said that was due to payments made by the airline on behalf of the Hajj participants and he gave the assurance that that would be corrected soon.

The Minister answered in the positive, questions put to him as to whether the Airline could, with time stand on its feet and discard the idea of joint ventureship in view of the current situation, whether the airline could become time conscious and whether the current temporary management team could bring efficiency to Ghana Airways.

Ghana airline pulls out of SA deal

(South African Press Version) -- The Ghana government has announced it has withdrawn from a controversial joint venture partnership it sought to reach with Nationwide Airlines of South Africa to salvage the West African country's troubled national carrier, Ghana Airways.

Richard Anane, Minister of Roads and Transport, said yesterday the government pulled out because the South African company failed to meet tough requirements.

The media had bitterly criticised the decision of the government to allow Nationwide to take over Ghana Airways since the deal became public, with sections of the media calling for the resignation of the minister.

Anane said in government's quest to salvage Ghana Airways from collapse it initialled a non-committal memorandum of understanding with Nationwide to meet five requirements as a pre-condition for further negotiations.

However, the board of Ghana Airways advised the ministry late last month that the business plan submitted by Nationwide did not meet the requirements.

The business plan was one of the five requirements, which the prospective joint-venture partner was expected to prepare at its own cost to guide the venture.

The others were that the partner should assist government establish a debt restructuring agreement with creditors, make available experienced managerial and technical services.

It was also to provide all the seed capital in the initial start-up phase and make available such aircraft and other equipment as required to operate the agreed service schedule.

Out of the five, Nationwide could not meet the requirement to provide all the seed capital for the initial start-up phase of the joint venture company and the assistance required for the government to put in place a debt restructuring agreement with creditors.

Ghana Airways operates to the US, Europe and some major African cities.