June 10, 2009

Virgin Nigeria restructures operation and ownership for efficiency

Omoh Gabriel, Business Editor
Virgin Nigeria is to be   restructured for effective   and efficient operation. As a result the airline has suspended long distance haul operation in favour of domestic routes.

The airline as part of its restructuring strategy is to take delivery of small planes that will take care of the needs of domestic routes instead of the large aircraft which are some times flown empty in some of the routes. The company will take delivery of the three aircraft which are financed by United Bank for Africa UBA to the tune of $32 million for this purpose soon.
Disclosing these developments to Editors on Sunday the new Managing Director of the company said Dapo Olumide  that several investors are waiting in the wings to invest in the airline because of the huge potentials they have seen in the airline. He said that as part of the airline restructuring the number of Directors in the airline has been prune down.

According to him there are only three executive directors on the board of the airline. He said some titles and designation in the aviation industry does not necessarily imply that such office holders are on the board of the airline. He said that Nigerians have learnt, gathered enough experience from Virgin Atlantic to effectively manage the airline.

He disclosed that about seven cadet pilot are in training in the US and that the airline is preparing the next generations of Nigerians who will take over the aviation industry from the present operators. He said that within two years of its operation Virgin Nigeria has been certified by IATA, a feat many older air lines took over a decade to achieve.

According to him the airline is replacing most of the expatiate seconded to the airline from Virgin Atlantic. He said it was not true that the former Managing Director resigned but that his contract with the airline expired last June but was prevailed upon to stay because there was no body on hand to take over from him so the contract was extended.

In the planed restructuring the Virgin name will disappear from Virgin Nigeria. Virgin Atlantic is looking to sell its 49 per cent stake in the Nigerian airline, for which it paid around $25 million in 2005. Virgin Atlantic will maintain technical service arrangement with  Virgin Nigeria as staff of the airline have finished their secondments.

“It is an interesting turning point it is like the parent is now letting the child go off on its own,” the senior executive, who has links to Virgin Nigeria but asked not to be named,.

The Virgin Nigeria board is due to meet next week to finalise the name change, with possibilities including “Air Nigeria” and “Nigerian Eagle”, the source said. He said the company had until July 7 to re-brand under a deal with Virgin Atlantic.

“Virgin Nigeria is embarking on a very clear strategy to focus on the domestic and regional market and we support that,” Virgin Atlantic Communications Director Paul Charles said. “Meanwhile we remain open to offers for our 49 percent share of the company,” he added.

He said talks had been held with one of the airline’s main existing backers, United Bank for Africa (UBA), and with others who had expressed an interest, but said a stock market placement could also be used to raise funds.
Virgin Nigeria in January suspended its loss-making long haul flights to Britain and South Africa in order to focus on its domestic and regional operations within West Africa.

Industry sources said UBA had been pushing for it to restructure and reduce losses on the competitive Lagos-London and Lagos-Johannesburg routes.