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07.09.2004 Business & Finance

Government reaches agreement with Ghana International Airline

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Accra, Sept. 7, GNA - The Government on Tuesday said it had reached an agreement with Ghana International Airlines (GIA), a consortium of corporate entities, to form a partnership for the operations of a new airline that would replace Ghana Airways.

The agreement is to pave the way for technical negotiations that would enable the Management of the new airline to take control of Ghana Airways and start commercial operations by the first quarter of 2005. Speaking to Journalists in Accra, Dr Richard Anane, Minister of Roads and Transport, said the new company would be used as a platform to raise new equity; debt and equipment financing of approximately 55 million dollars for the new airline.

He said under the agreement, Mr J. Ralph Atkin, Founder of SkyWest Airlines in the USA, would head the new airline as the Chief Executive Officer.

The GIA consortium is made up of the World Transport Group Incorporated, a Utah based company with Mr Atkins as President, Sentry Financial International Incorporated from Salt Lake City. The Minister said a major contributory factor to the agreement was the fact that GIA agreed to bear some risks in the operations of the new airline.

GIA was the only bidder, which agreed to share in the risks and also presented the best business plan.

KLM/Kenya Airlines and Ghana Air Partners were the other two short-listed partners but out of the two, the former was prepared to share part of the risks but did not present a good business plan while the latter was not ready to share any risks at all.

Dr Anane said the Government and GIA would take shares in the percentages of 70 to 30, respectively.

He said meanwhile the Government has appointed a Taskforce to manage the orderly "wind down" of Ghana Airways while negotiations continued for the new airline to be constituted.

The Government has also appointed Price WaterhouseCoopers, Financial Consultants to advise it on the ring fencing of the debt of Ghana Airways.

The Minister explained that Ghana Airways had been struggling to maintain consistent commercial operations due to mounting debt and a deterioration in the performance of its operations.

Government, therefore, decided to find an experienced strategic partner based on diagnostic, forensic and expert advice on how to turn the fortunes of the airline around. 07 Sept. 04

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