21 February 08

VIRGIN NIGERIA’S NIGERIAN SHAREHOLDERS STATEMENT ON THE RELOCATION ORDER BY THE FEDERAL GOVERNMENT OF NIGERIA

We have watched with deep consternation the unfolding drama concerning the directive to Virgin Nigeria to relocate its domestic operations out of the Murtala Mohammed International Airport (MMIA).

We have today decided to make public our stance against this directive, first as part owners of Virgin Nigeria Airways with 51% equity and also because we believe that this order is not in the best interest of Nigerians and the entire nation.

In the past two years, Virgin Nigeria has built up a global staff of over 1,200 operating 10 aircraft in their fleet and has only recently ordered 24 Embraer aircraft as part of its expansion plans.

This massive achievement is being put at risk by the requirement for Virgin Nigeria to split its domestic operations from its regional and international flying and to move to the MMA2.

We, the Nigerian Institutional Investors, therefore oppose this relocation order to MMA2 for the following reasons.


Rule of Law and sanctity of agreement

The operation of Virgin Nigeria out of the Murtala Mohammed international Airport (MMIA) is a core condition of the MMU (Memorandum of Mutual Undertaking) signed by the Federal Government of Nigeria and Virgin Atlantic on 28 September 2004. It is therefore unfortunate that despite this agreement, Virgin Nigeria is being forced to relocate.

Fundamentally, operating from the same terminal is an absolute requirement for any airline hoping to create an effective hub operation that will eventually allow it to compete effectively on a world stage.

Since the rule of law is an important platform within which this Government stands, this means that the sanctity of agreements such as the one signed between Virgin Nigeria and the Federal Government is surely unimpeachable.


Safety, Security and Passenger comfort

You may already know that Virgin Nigeria only recently successfully completed the IOSA Audit. The IOSA (IATA Operational Safety Audit) is the highest International aviation audit which evaluates the airlines operational and safety procedures. Virgin Nigeria’s location at the MMIA is a key part of the success of this audit.

The safety and security of Passengers is our priority at all times and Virgin Nigeria will only operate from a terminal, which supports its primary objective of operating a safe airline offering hub services to our Passengers.

The Passenger experience would be severely comprised should Virgin Nigeria move its domestic operations to the MMA2. This is because the Passengers would no longer enjoy seamless transfers from Domestic to International and vice versa, which is one of the benefits and advantages of a hub. They would have to transport themselves along the ever busy airport road in order to make their connections. It is our belief that airport authorities and airlines are all in business for the Safety, Security and Comfort of the Passenger and should ensure this is always upheld.

The now verified IATA report, has confirmed inadequacies with the MMA2 terminal, the venue of the proposed relocation. It is our understanding that these concerns are yet to be addressed.


Potential Economic Loss

This relocation order to Virgin Nigeria has massive financial implications to us the Investors, and by implication, the economy of Nigeria.

To date, Virgin Nigeria has made an investment worth over $250 million dollars which includes the initial equity contributions made by us the investors in establishing Virgin Nigeria. This investment in establishing the airline in terms of Infrastructure, Equipment, People, Systems and Structures in accordance with the FGN’s wishes both at MMIA Lagos and our outstations in Accra, Cotonou, Dakar, London, Johannesburg, Douala, Abuja, Owerri, Port-Harcourt Sokoto, Kano and Calabar is at huge risk should the airline be forced to relocate. These investments were also made in response to the FGN’s directive to create a hub airline operating to the highest international safety standards.

Movement of Virgin Nigeria’s domestic operations to MMA2 would mean a reduction in Virgin Nigeria’s current domestic flights by at least a third. This would invariably translate into loss for the airline and loss of ancillary revenue to various Nigerian Supplier services such as Ground handlers, Caterers, Fuel vendors and various other suppliers. It is also likely to affect our human capital, in whom we have invested so heavily in terms of training and skills development.

We do not believe the aviation sector or the nation ready for this level of economic loss. The aviation industry has only become vibrant this last couple of years with the entry of Virgin Nigeria and subsequently other Carriers.



SIGNED NIGERIAN SHARHOLDERS

Capital Alliance Nigeria Limited, Dantata Investments & Security Co. Ltd, UBA Global Markets, IBTC Ventures Ltd and BGL Limited.
 
Asset Resource & Management Co. Ltd, Industrial & General Insurance Co. Ltd, UNIC Insurance Plc, Leadway Assurance Co. Ltd, Access Bank Plc, Linkup Investment, IBTC Chartered Bank, UBA Insurance Co. Ltd and African Alliance Insurance Co. Ltd.

Crusader Insurance Nig Ltd, Lion Buildings Ltd, Magami Holdings Ltd, Oasis Insurance Co. Ltd, Wema Securities & Finance Ltd and the University of Ibadan Endowment Fund.

 

About Virgin Nigeria

Virgin Nigeria is Nigeria's private sector flag carrier, 51% owned by Nigerian institutional investors and 49% owned by Virgin Atlantic. The airline was formed in September 2004 when the Federal Government of Nigeria announced the selection of Virgin Atlantic Airways as the strategic investor and technical partner in this exciting project. With the mission of being a World Class Airline from the heart of Africa, Virgin Nigeria, has steadily developed a global network that serves domestic, regional and international routes from its operational hub at the Murtala Mohammed International Airport, Lagos.

With a focus on improving the Customer’s Experience, Virgin Nigeria constantly develops innovative products for the Customer‘s Convenience. Some of these product innovations include the online booking and payment system which allows the Customer book from anywhere in world and make payments with an Interswitch debit card for people in Nigeria and most international credit and debit cards for persons in London.
 
At the just concluded Dubai Air Show, Virgin Nigeria announced an order for 24 Embraer aircraft. The order consists of E170s and E190s jets. Delivery of the first aircraft is scheduled for September 2008.

For more information, visit www.virginnigeria.com