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The Real Reasons behide Nigeria Airways Liquidated

Nwachukwu Okafor
Truths The President Must Hear
Imust confess that I am one of those who were surprised by your long-pursued election. Your dexterity in fighting for what you believed in for so many years has inspired many Nigerians including myself. Since that historic election, I have paid a very close attention to the man and his message.

One of your first messages which was delivered in the second week after the election was  that in 16 years the  previous  administrations which was run by the People’s Democratic Party PDP, destroyed all the major employers of labour, you mentioned; Nigeria Airways Limited, NigerianShipping Line and Nigeria Railway Cooperation.

This particular message resonated with me, for I was one of those that were chased out of Nigeria’s Airways Limited by agents of the state who placed the gates of the company under lock and key, thereby destroying the collective aspirations of many Nigeria and sending a lot of people to their early deaths.

A lot of lies have been told about why the Airline was liquidated by those who destroyed it. They said the Airline was heavily indebted and her operations were being mismanagedand therefore there was no need to put more money it. That is very far from the truth!
Recently, Nigerians read in the papers about recommendations advising Mr. President, that indebted private airlines should be formed into a National Airline. Such life line was never extended to Nigeria Airways Limited before her liquidation. That notwithstanding, the recommendation will portend grave injustice to Nigerians and will be a grave mistake which this government cannot afford. I shall return to this later.

Nigeria Airways Limited: The Golden Geese
When Nigeria Airways was formed in 1958, after separation from West African Airways Corporation (WAAC), it was to provide Air Transportation and also serve as a backup to the NigerianAir force. Over the years, NAL performed these functions very creditablysupporting troop movements, sports delegations hajj uplifts, cash movements by the CBN etc. Often times the Airlines services were never paid for, but NAL continued to fulfill the aspirations and mandates of her shareholder the Federal Government of Nigeria.
Unfortunately, as the years went by there was no effort by successive administrations to re-fleet the Airline and NAL began to lack capacity, but never capability for among her staff were the best trained aviators any country can boast of.

What The President Needs to Know
It has been said, that as at the time of her forced liquidation, that NAL was indebted to the tune of millions of dollars. This is a lie that has been propagated by those who had other reasons to liquidate the Airline.
The biggest debt which NAL owed at a time was to Equator Leasing Cooperation(ELC). The amount of the debt was for $31 million, which resulted from nonpayment of lease rentals of a DC-10 aircraft which NAL leased from ELC. I can authoritatively report that the debt was paid by the General Abdul salami Abu-Bakr administration. Details of this transaction still exist with the Nigerian High Commission.
The final document was signed off by the High Commissioner and the money was released from the Federal Government accounts in London.
The truth is that as the time that Nigeria Airways was liquidated,the only debts being owed were trade debts which are current operational debts.

It is a known fact that NAL was the biggest real estate investor of all government Agencies. As at the time of her liquidation NAL owned about 300 prime properties scattered all over the world.
The last valuation performed by ODUDU AND COMPANY, a real estate firm in Nigeria (valued the properties at billions of naira), yet the company was sold. Some of these properties included the large expanse of land beside Arch Bishop Vinning church in Ikeja G.R.A, including the Ikeja golf course.

They also included properties that were returned by the General Abacha family after the General’s death.
NAL had about five choice properties on Kwairanga Street in Kano, the same street where the General lived.  Some of these properties were sold to the General‘s representatives by NAL Management under a directive from the Ministry of Aviation. When the General died NAL approached the representatives and these properties were released. Now those properties were part of what was sold in the forced liquidation of NAL, yet Nigerians are yet to be told how much was realized from these sales.

Mr. President Sir, in 1998, the then management of NAL, decided to create five profit centers from the core business of the Airline.Five companies were set up.These included the following:

These companies were set up to be fully owned subsidiaries of NAL.They were asked to fend and survive their own.One of these companies, SAHCOL became very successful and at a time was adjudged the best managed Government owned Company by the Central Bank of Nigeria.

This particular money earner was sold by the past administration as part of the liquidated assets of NAL and is now in private hands and till date Nigerians’ are yet to be told exactly how much the company was sold for and what the money realized, was used for.
The accounting firm of Babington Ashaye & company were appointed liquidators of NAL and disposed of all assets of NAL but not her liabilities especially to the staff.

This Firm took over all assets all NAL including over 300 real estate, which were all sold.
These assets were one of the main reasons why NAL  was prematurely liquidated!
Since Government is the single share holder of NAL, her assets therefore belongs to the Government and the Nigerian people. The liquidators of NAL are duty bound to account to Nigerians about their investments.

NAL’s Staff Emoluments
The airlines staff were among the best in the world of aviation. They included members of the elite Presidential fleet who flew Nigerian Presidents from the days of President Gowon.Some of them are still in service,yet some were allowed to die unsung by a Government they dedicated their lives to.

A case in point is Captain Abdullahi Shehu, a first class Pilot who served several years on the Presidential fleet but died at the Ilorin General Hospital for lack adequate medical care.  He is eminently qualified for a posthumous Presidential honour. Since the liquidation ofNAL,Nigeria have lost over 400 professional Aviators who served in the Airline but were refused their due by the Government.The government of President Shehu Musa Yaradua paid  five years salary arrears to the staff, with promise to pay the balance, but he did not live to fulfill that promise.

If the proceeds of the liquidation of NAL are to be properly accounted for, it will be enough to pay the benefits and set up another airline without taking money from the government coffers.

Involvement of Virgin Atlantic and Other Vested Interests
Mr. President,the traffic pattern between Lagos and London is for upper class passengers who fly British Airways Limited, the Middle class passengers and others who flew Nigeria Airways limited, Virgin Atlantic and the rest. The competition was actually between British Airways and Virgin Atlantic. Their battle ground however shifted to NAL, Lagos -London route being by far one of the most lucrative routes of these airlines.
When Virgin started making overtures to the government to partner with NAL, British Airways fought back and went as far as letting NAL fly one of her Aircraft for free.

Nigeria AirwaysManagement resisted this intrusion by Virgin Atlantic using our Government. The Managements warning about the true intentions of Virgin Atlantic fail on deaf government ears and NAL was forced to go into a forced marriage with Virgin Atlantic.
The predatory business practices of the Virgin Mamagement were one of the final straws that destroyed the Airline. With Nigeria Airways out of the way, Virgin Management sold another dummy called Virgin/Nigeria to the government. Thiscontraption was never planned to fly as the agreement was skewed to fail and fail it did.This cleared the way for two predatory Airlines from Britain to occupy the Nigerian airspace without any competition whatsoever!

The Advice of The Handover Commitment
Nigerians learnt from the pages of Newspapers that this committee advised that some local airlines which are heavily indebted should be formed into a National Airline; this will be a huge mistake and shows a lack understanding of the aviation industry by the members of the Committee. Several questions needed to addressed.
· What will become of the huge debts of these airlines?
· Will they relinquish their shares to the Government?
· What about their labor issues, will the government pay off their staff before paying off NAL staff who actually worked for the Government?

These and several other questions are reasons why this recommendation is not workable.
In the very recent past they Government of Nigeria invested over NGN35 billion in a private Airline called NICON Airline from the so called Aviation Intervention Fund. That Airline is now history yet, they promoters are yet to account for the money they received from the government

The President recognized theneed for National Airline in the second week after his historic elections and I will amplify them. The return on investment(ROI) in the aviation industry hovers around 13-15%, yet countries continue daily to shore up their national carriers for reasons that I will mention a few bellow:

Nigerians are travelers. They are the darling of most airlines and that is why most of the Airlines will use every diplomatic muscle to come to Nigeria. Nigeria is also mainly a cash economy, so people daily buy ticket with cash. These monies are then moved out of Nigeria by these foreign Airlines without investing anything in the economy. A national Airline will retain these funds in Nigeria.It’s estimated that capital flight in the Aviation industry will reach over N350 billion by the end of 2015. Nigeria can no longer afford such wanton exploitation of our airspace!

A national airline will invest in adequate manpower development for the industry. That was one of the duties performed by NAL and today all those trained by NAL are either dying off or becoming old. So we are left with the importation of manpower for a sensitive industry such as aviation, without any care as to the various implications especially to our national security.

A national airline brings in tourists and businessmen who in turn, bring in much needed foreign exchange to support the economy. This is why the British Government supports British Airways; KLM is supported by The Netherlands, Air FRANCE by the French Government, Emirate Airline by the UAE,Lufthansa by the Germans, Ethiopian and Egyptians Airlines by their respective governments. Nigeria should follow the examples of theses developed economies that support their national airlines, with the attendant and accruable benefits to the country.

Hard Facts About the Aviation Industry’s Capacity to Boost the Economy and Provide over 100,000 Jobs in the Next (5) Years
The Oxford Economics in their report on the Nigerian Aviation industry gave the following facts,

“The aviation sector contributes NGN 119 billion (0.4%) to Nigerian GDP. This total comprises:
NGN 59 billion directly contributed through the output of the aviation sector (airlines, airports and ground services);   NGN 34 billion indirectly contributed through the aviation sector’s supply chain; and NGN 27 billion contributed through the spending by the employees of the aviation sector and its supply chain.
In addition there is NGN 78 billion in catalytic benefits through tourism, which raises the overall contribution to NGN 198 billion or 0.6% of GDP.

Major Employer
The aviation sector supports 159,000 jobs in Nigeria. This total comprises:
44,000 jobs directly supported by the aviation sector; 64,000 jobs indirectly supported through the aviation sector’s supply chain; and 51,000 jobs supported through the spending by the employees of the aviation sector and its supply chain.
In addition there are a further 130,000 people employed through the catalytic (tourism) effects of aviation.
High Productivity Jobs
The average air transport services employee generates NGN 3.5 million in Gross Value Added (GVA) annually, which is nearly seven times more productive than the average in Nigeria.
Contribution to public finances
The aviation sector pays over NGN 8.5 billion in tax including income tax receipts from employees, social security contributions and corporation tax levied on profits, with a further NGN 17.0 billion of revenue coming from VAT on domestic and international flights originating in Nigeria. It is estimated that an additional NGN 8.9 billion of government revenue is raised via the aviation sector’s supply chain and another NGN 7.1 billion through taxation of the activities supported by the spending of employees of both the aviation sector and its supply chain.

The above are bare facts about this hugely neglected industry. The truth will become more apparent when we have a national carrier. The verifiable estimation is that if run properly a new national carrier will generate an additional 100 000 jobs in the next five (5) years”. The above facts and much more are part of the reasons why Mr. President should urgently fix this industry.
Investment/Hidden Funds in Aviation
The big question will be about the source of funds assuming the Federal Government decides to embark on this venture. I have shown that when the proceeds of NAL’S liquidation are accounted for, the Government will realize enough money to invest in this new venture.
In addition to the above is the issue of BILATERAL AIR SERVICES AGREEMENTS BETWEEN NIGERIA AND OTHER COUNTRIES (BASA). Air spaces are valuable property owned by the Government. Where country A decides to fly into country B’s airspacesix times a week, countryB must be able to fly into country A’s the same equal times as B. If for any reason country B cannot fully use her capacity which is called frequency in aviation and A is doing more flights than B, such excess frequency are monetized.The details of these agreements and much more are what is contained in Bilateral Air Services Agreements between one country and another and is known as BASA.

Before the liquidation of NAL,she was in charge of Nigeria’s BASA rights and moneys accruing from these rights came to NAL. With the liquidation of NAL, the Ministry of Aviation assumed this responsibility. The money is warehoused at the Central Bank of Nigeria with certain percentage of the proceeds going to the Nigerian Civil Aviation Authority NCAA. The funds in this account runs into millions of dollars and this is verifiable. Assuming that the Government cannot find funds, BASA money is more than enough to start two new Airlines!

Yet, there are better alternatives. Nigeria is a country that is blessed with so much intelligent and brilliant minds. In these group you find entrepreneurs who given the right incentives will invest with the government to give Nigeria a befitting National Airline.
Government’s equity will come in form of her BASA rights and provision of Sovereign guarantees. These guarantees will assist the new start up airline to access funds from so many finance agencies that are ready to advance funds to institutions giving the right parameters.These institutions include but are not limited to the following:
Several other leasing agencies across the world. There are many other financial arrangements and scenarios which can be used to access funds from the international financial market for projects such as this.
In conclusion, I have shown that the decision to liquidate NAL were for reasons that were very inimical to the economic well being and corporate existence of Nigeria.

I have also shown that proper accounting of proceeds from NAL’S liquidation can settle her staff benefits and set up a new National carrier. I have also provided alternative sources of financing which are practicable and will help Mr. President bequeath a functional and sustainable aviation industry to generations yet unborn.

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