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26.04.2005 Business & Finance

Confirmed: GIA Is A Bogus Deal

By Statesman
Confirmed: GIA Is A Bogus Deal
... GIA is yet to secure a single aircraft It has been confirmed after months of speculations that Ghana International Airlines does not have the capacity and expertise to save Ghana Airways let alone start a new national airline for Ghana. This follows several years and months of disturbing developments in the Ghanaian aviation sector, culminating in the 'folding up' of Ghana Airways to allow Ghana International Airlines run a new national airline. Despite several complaints and questioning of the GIA deal by the media, industry & financial experts, government through then Minister for Roads & Transport Dr. Richard Anane side stepped other bidders and literally handed over Ghana Airways' license to GIA describing them as strategic partners. Crumbling under reports that it has failed to raise the needed funds to start its operations, the GIA released information to the media that it has in fact raised $2.9 million as part of its 30 per cent stake to help the new national airline begin operations in June. GIA is yet to secure a single aircraft for its operations while government is still negotiating over the severance packages and other entitlements to staff of the now 'dissolved' Ghana Airways. Latest information is that the Ralph Atkin led GIA is in fact struggling to find resources to justify its selection as strategic partner and managers of the carrier to replace Ghana Airways Ltd. The Statesman, a pro-government private newspaper reports that the difficulties been faced by the GIA has resulted in Ethiopian Airways (reputed to be one of Africa's most Successful airlines) been contacted to rescue both GIA and Ghana Airways. The Ethiopians have already come into town and held discussions with government officials on the possibility of government retaining 25 per cent shares in Ghana Airways and selling off 40 per cent to Ethiopian Airways and GIA. The deal will see the state owned Ethiopian Airlines providing a modern fleet of aircraft, expertise, maintenance and training facilities, a strong reputation and reconciliation of routes for the Ghanaian carrier. There are also strong indications that Ethiopian Airlines deal will see Ghana Airways maintaining its name contrary to what was programmed under the now discredited GIA deal. Meanwhile, despite serious questions marks about the GIA and their capabilities, government officials according to the Statesman are insisting on keeping them on board. This is in spite of the fact that the Ethiopians are ready to absolve more than the 40 per cent been proposed for the two companies. Significantly, the first person the Ethiopians met when they came to town was Dr. Anane who no longer handles the aviation portfolio before meeting the Chief of Staff and Minister for presidential affairs Kwadwo Mpiani to advance the negotiations. GIA, with its American owners was controversially given the nod last year to partner government when the operations of the distressed Ghana Airways was terminated after it had run into debt through decades of bad management and service delivery. It was hoped that GIA, as part of the deal will bring in not only expertise but also modern aircraft to form the new airline. GIA has faced some difficulties in raising capital to run the new airline. The state-owned Daily Graphic, however, reported in its 31st March edition that $7 million has been mobilized by the shareholders of the new airline, with government contributing $4.9 million as part of its 70 per cent stake. The Special Assistant to the Chief Executive of GIA, Sean C Mendis told the Daily Graphic that the airline will start operations in June with two Boeing MD-90 aircrafts, which will later be increased to four within the year to ply the sub regional routes and another two Boeing 767-300 ER to ply the intercontinental routes to Europe. The latest information over the apparent inability of GIA to deliver on its own capacity even before operations had begun may be interpreted by critics to confirm serious reservations about the decisions of the Minister of Roads and Transport last year to opt for GIA. The integrity of GIA's winning bid was fundamentally soiled by the changing of the rules after all the five bidders had handed in their offers.
The initial condition was for all bidders to take over all debts of Ghana Airways. But against proper tender procedures, none of them was allowed to redesign their package under the new terms, which radically provided that the government of Ghana would take over the debts of Ghana Airways, now put at about $ 190 million.
GIA's offer was accepted. But their apparent difficulties in mobilizing resources throw serious doubts on how they could have managed the Ghana Airways debts under the old terms.
Government, the Statesman reports run to Ethiopian Airlines for support to run the new national carrier when it became obvious they couldn't, with an initial offer to split its 30 per cent stake with them.
The decision to bring in Ethiopian Airlines again without any invitation to other companies brings back the issue of accountability and fairness as was exhibited with the selection of GIA over the four other bidding companies.


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