ATW Daily News

Virgin ready to offload Nigerian burden

Wednesday August 20, 2008

Virgin Atlantic Airways confirmed reports that it is seeking to dispose of its 49% equity stake in Virgin Nigeria, the Lagos-based flag carrier it helped establish in 2004 and launch in April 2005.

Nigerian institutional investors own 51%. "The intention has always been for the airline ultimately to be wholly owned by Nigerian investors. It is now time for Virgin Nigeria to go its own way with local shareholders," Virgin Atlantic President Richard Branson said, noting that VS "wishes to focus on growing its core long-haul business." It is in talks with potential purchasers.

VS's confirmation it will sell its stake in the African carrier follows months of intense dispute with the Nigerian government, which last week forced the relocation of Virgin Nigeria's domestic operation from the international wing of Lagos Murtala Muhammed International to the second terminal despite a court hearing on the matter scheduled for Oct. 7. "It is regrettable that events have caused us to review our shareholding and whether it is appropriate that the Virgin brand should remain linked to Virgin Nigeria," Branson stated.

He also stressed that VS has had no financial benefit from Virgin Nigeria with respect to leases, rental fees or facilities and that "in fact, Virgin Nigeria has benefited from highly attractive lease rates offered by Virgin Atlantic. While royalty fees are payable for the use of the Virgin brand, Virgin Nigeria has not paid anything since its launch."

Nigerian media recently reported that VS had been pressured by minority shareholder Singapore Airlines to sell its share in Virgin Nigeria, which last year posted a loss of NGN9.5 billion on revenue of NGN20.9 billion and negatively impacted Virgin Atlantic's profit-and-loss statement. SIA CEO Chew Choon Seng has stated several times that he is dissatisfied with VS's financial performance (ATWOnline, May 15).

by Cathy Buyck

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