Stakeholders foresee danger as Jimoh Ibrahim hops into Virgin’s cockpit
When the business mogul and chairman of Global Fleet announced his acquisition of 51 percent of Nigerian institutional investors in Virgin Nigeria, there was apprehension and doubt over his ability and capability to take the major Nigeria airway to a debt-free and strong enterprise. Ibrahim’s history in the business circles has earned him the name […]
When the business mogul and chairman of Global Fleet announced his acquisition of 51 percent of Nigerian institutional investors in Virgin Nigeria, there was apprehension and doubt over his ability and capability to take the major Nigeria airway to a debt-free and strong enterprise.
Ibrahim’s history in the business circles has earned him the name Donald John Trump of Nigeria. Trump is Chairman and Chief Executive Officer (CEO) of the Trump Organization, a US-based real-estate firm. Trump is many things: business magnate, socialite, author and television personality. He is the founder of Trump Entertainment Resorts, which operates numerous casinos and hotels across the world.
Ibrahim the undertaker
From an obscure family in Ondo State, Ibrahim is today the most inspiring businessman in Nigeria. It is said that he made his first millions while studying Law at the Obafemi Awolowo University (OAU), Ife when he ran seminars for all local governments on taxation.
After veering into politics in 2002/2003 when he aspired for the governorship post in Ondo State, he started Global Fleet, a petroleum marketing company. Now, he has about 250 service stations, most of them acquiredrather than built from the scratch. Ibrahim made the big leap when he bought Nigeria’s number one insurance company, NICON.
He also bought EAS Airlines and renamed it NICON Airlines. He bought the Meidan Hotel in Lekki-renaming it NICON Hotel. He bought the Le Meridian Hotel in Abuja and renamed it NICON Luxury Hotel.
He equally has a furniture making company in VGC that brings in income in hundreds of millions. It is said that he controls assets worth over N100 billion.
Ibrahim’s first investment in the airline business was in 2006, when Fleet Air Nigeria Limited, a subsidiary of NICON Group of Companies, formally merged with EAS Airlines to form NICON Airways.
Today, the airline’s business has collapsed due to financial crisis that erupted shortly after Ibrahim took over the company. In an interview published in the Tell magazine recently, Ibrahim said he could not save EAS Airlines because management insisted on buying new aircraft instead of leasing.
He maintained that Virgin Nigeria has a strong technical back up unlike EAS Airlines.
How the Virgin’s trouble started
The sale of Virgin Nigeria’s stakes arose from a dispute after Virgin Nigeria’s domestic operations were moved against its will in 2008 by the Ministry of Aviation from the international wing of the Murtala Muhammed Airport Lagos to Murtala Muhammad Airport Terminal 2 operated by BI-Courtney Aviation Services under a Public-Private-Partnership (PPP) project.
Virgin Nigeria had twice refused the directive to relocate its domestic operations from the international terminal citing the Memorandum of Mutual Understanding it signed with government during the administration of Chief Olusegun Obasanjo and a pending appeal in a Lagos High Court as reasons for not complying.
But the Ministry of Aviation gave security reason for separating international operations from domestic and forcefully ejected Virgin from the international wing in the second quarter of 2008.
Experts express mixed feelings
An industry analyst and former chairman of the Nigerian Cabin Crew Association (NACCA), Mr Olumide Ohunayo said based on Ibrahim’s roles in the defunct EAS Airways, the industry is not that happy about the new owner but there is nothing anybody can do about it.
According to him, “It is with trepidation that the news got to the industry that NICON Group has bought Virgin Nigeria, considering the calamitous entry of the group some years ago through the liquidated EAS airlines, which has prompted staff of EAS airline to go to court seeking redress for unpaid salaries and allowances.” Should the affected workers continue to wait for the judicial process or go for a quick regulatory intervention since NICON has returned into the industry through Virgin Nigeria?
He said, “Luckily, Virgin Nigeria is not listed on the Stock Exchange. The share price would have taken a drastic nosedive with that announcement based on that sad experience, coupled with sole-owner-manager syndrome that has bedevilled our domestic carriers which made almost all of them fail the NCAA financial audit with crippling debts.”
Ohunayo however, charged the NICON Group to avail itself the current trends in the industry so as not to repeat the past experience.
He said, “In welcoming the group back into the industry, they need to understand the new dynamics as exemplified by the airline. The impeccable systems, processes and management had been put in place in order to continue to maintain, sustain and retain the necessary benchmark that has made it a willing bride of foreign airlines.
“It is not yet uhuru for the carrier except necessary running funds are immediately injected, ownership expanded to reflect the national carrier status of its founders. A good replacement for Capt Olumide, if he cannot be convinced to stay while efforts be geared towards converting the aircraft options to firm delivery. Anything short of these will make us a laughing stock in the Virgin Empire and beyond,” he suggested.
Captain Dapo Olumide is the immediate past MD of Virgin Nigeria. He resigned when Ibrahim acquired Virgin Nigeria.
The former Head of Public Affairs and CEO of Belugene Consult, Mr Chris Aligbe said the industry is apprehensive and that there are worries about whether Virgin Nigeria will still fly for long or whether it will sink like the titanic. “No matter what anybody thinks about Jimoh Ibrahim’s Virgin Nigeria as it is being prepared for another re-branding, only time will tell. The story of Virgin Nigeria will remain a sad commentary on the quality of leadership in our nation and a conclusive lesson on how not to hand over a major national sector to a foreigner who has no regard for our national interest. It is our hope that it will serve as a prolegomenon for future actions in the aviation sector.”
He said former President Obasanjo unilaterally took the decision to replace the defunct Nigerian Airways because the absence of a national carrier became embarrassing to the Nigerian government.
According to Aligbe, Obasanjo later invited and encouraged selected Nigerians and institutions to take up the 51 percent equity allotted to Nigeria in the acquisition deal.
He said, Richard Branson, after having recovered more than twice his actual investment, had to pull out, not for any reason but, having lost the battle to keep operating Virgin Nigeria from the international terminal of MMA. He said the whole objective of using Virgin Nigeria to enlarge the market share of Virgin Atlantic through cabotage and seamless transfer was defeated as his (Branson’s) interest was no longer served.
According to him, it is relieving that a Nigerian has taken over saying that there will now be a Nigerian roadmap and passion.
Aligbe said if Ibrahim knew fully the reality of the airline he has acquired, he would have persuaded Olumide and his team to stay, if they left by themselves, or would not have sent them away, if he did. “I do not know actually what happened,” he stated.
He explained, “As it is today, to achieve a turn-around, he has to first dismantle all the arrangements that held the airline and Olumide’s management hostage. Some of these include: disclosed and undisclosed debts, the Embryer Orders, the 737s leases and possible claims by erstwhile owners. He would no doubt be faced with contesting some spurious claims in court or face litigation by claimants. These are things that only the ownership, and not management can do. Having assumed by virtue of ownership, financial responsibility for Virgin Nigeria, he must try to learn and understand how the Virgin Group brought the airline to its knees as well as the value UBA’s financial engineering added. He must also critically evaluate the ‘owner-manager’ phenomenon which is the principal bane of all our airlines; collapsed ones, collapsing ones and limping ones.
“The truth is that Virgin Nigeria is an airline whose fate is on the tide. Whether it will flow or be washed ashore like a jetsam is yet to be seen.”
Regulator’s threat
Meanwhile, the Director General ofNCAA Dr. Harold Demuren has said that the agency under his control would not hesitate to ground any airline seen to be unable to meet the standards of Nigeria’s aviation sector.
Demuren said that NCAA is closely monitoring transition in the Virgin Nigeria Airways stressing that a commercial transition in any organisation is allowed but in aviation, safety must not be compromised.
He said that the regulatory authority’s searchlight is on the airline because of the past records of Ibrahim in the industry.
Demuren explained that the agency would not allow anybody to destroy the structure laid by the airline’s former technical partner and the mother company of Virgin Nigeria which is Virgin Atlantic.
He stated that the only gains the country’s aviation industry enjoyed from Virgin Atlantic are the foundation and structure it put in place to develop the system in Virgin Nigeria.
“We are monitoring everything! If we find out or discover that at any point in time, the airline cannot carry out a safe operations, for sure, we will not hesitate to ground it because we cannot afford to see anybody mess around this time,” the NCAA boss promised.
But Jimoh Ibrahim allays fears
Despite all this, Ibrahim said he is ready to turn-around Virgin Nigeria. Speaking with aviation correspondents at the NICON Group Headquarters in Apongbon, Lagos, Ibrahim allayed fears entertained in aviation circles that Virgin Nigeria might go the way of NICON Airways, saying NICON Airways has not been rested but that he had plans to merge the airline with Virgin Nigeria.
“The deal for Virgin Nigeria had been on since 2009, but you know it’s not every deal that you put on the pages of newspapers when you are yet to conclude it. In that very year 2009, if I had wanted to make NICON to be flying with all the aircraft, we would have done so. Remember, NICON Airways operated for 16 months but we felt that let us quickly look at this deal, and then we can have a merger later and then we can move on.
“But if I had made up my mind and said, ‘we don’t want Virgin Nigeria, let me use the money for NICON Airways,’ maybe that would have been a different thing, maybe, we would not have issues with NICON. The Virgin deal started in 2009 and it went back and forth till it closed…” he explained.
He said his immediate plan was to stabilise the airline with seven aircraft and raise the number to 17 in a short time and re-launch the once rested international routes.
Ibrahim added that he was moved by the fact that the pulling out of the Virgin Group created the erroneous impression that Nigeria lacks the capacity to run airlines.
He disclosed that plans had been concluded to change the name of the airline to another one that would reflect the integrity of Nigeria, adding that he has immediate, medium and long term plans to better the lot of the airline.
“There will be a name change that can never be ruled out. The name change will reflect the integrity of our nation. If I buy any foreign company, forget about brand or no brand, whatever the brand, I will change it to reflect a Nigerian name. Even if Virgin gives me their brand for free, I will not take it, I will still use my local name and in a matter of days, it will be made public,” the business chief noted.
There are indications that Virgin Nigeria used to pay N1 billion annually for using the Virgin brand name. Now, the new owners will have to tackle the liabilities of the airline which is put at $100 million.
Stakeholders in the aviation sector now wait anxiously to see how Ibrahim’s magic wand could make the once despised virgin become the cynosure of all suitors.