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21.10.2004 Business & Finance

Govt To Float 70% Shares In New Airline

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The government has expressed its intention to float part of its 70 per cent equity of the new airline set to replace Ghana Airways, when it becomes operational.

The new airline will be jointly owned by the Ghana Government and the Ghana International Airline (GIA), a US-based consortium, which has a 30 per cent equity in the new airline.

The Minister of Roads and Transport, Dr Richard Anane, announced this in a speech read on his behalf by his deputy, Mr Emmanuel Adjei-Boye, at a press conference in Accra on Tuesday to respond to concerns raised by the workers union of Ghana Airways. He said floating the shares would offer the opportunity to workers of Ghana Airways to buy shares in the new airline thereby giving them a stake in it.

He said although the government recognised the status of workers of Ghana Airways, it “wonders the capacity in which they could have entered to bid as a strategic partner”. The minister described as “intriguing” an admission by the union that there existed a 'mafia group' among them and also their observation of “bad management practices” in Ghana Airways.

Explaining the circumstances that led to the ministry writing to the KLM group, he said prior to the selection of a strategic partner, there had been a perception among a section of the public that the KLM group had offered a more credible proposal but had been deliberately ignored.

“It was in this light that we had to exercise the discretion of bending even backwards to write to the KLM and the Kenya groups to reconsider their position from management contract to putting in some equity,” he said.

He added that “to this day, the KLM group continues to stand by its position that it cannot take part of the risks in the operations of the airline”. Dr Anane said the view that the selection process was shrouded in some secrecy and skewed to benefit a particular competitor had “no foundation and may be clad in mischief”.

He also described as false a claim that officials of the GIA had gone to Barclays Bank in Accra to source for funds.

“In the past three weeks representatives of GIA have been in the country to process and regularise the registration of the company, the securing of an Air Operator's Licence (AOL) and the opening of a bank account.They have explored two banks, Barclays and Stanchart banks for consideration,” he explained.

He said $7 million was required to kick-start the operations of the new airline, adding that the amount was to be shared between the two partners; the Ghana Government and the GIA, in the ratio of 70 per cent : 30 per cent as per the equities.

He said the amount, among other contingencies was to be used for the automation of the ticketing and accounting systems and in the interim, leasing of aircraft. He said due to the absence of automated accounting and ticketing systems, tracking of revenue over the years had been extremely difficult.

“Reconciliation of tickets to appreciate uplifts has been one of the major areas of contention between Ghana Airways and the Ministry of Roads and Transport. Ghana Airways had not been doing this since 1999,” he explained.Dr Anane said the employment of staff of the new airline would be done by the new airline management, without any government interference.

The deputy minister, in response to a question, said the registration of the new airline would be completed in about two weeks.

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