Home based carrier …ET deal still on the table, more investors express interest

Fresh from signing letters of intent with two major aircraft manufacturers to acquire a total of nine aircraft as the starting fleet for the proposed new homebased carrier, Aviation Minister, Joseph Kofi Adda, has confirmed that the deal signed with Ethiopian Airlines early this year is still on the cards, while many more institutional investors have also indicated their readiness to partner government in this new enterprise.

Speaking to the B&FT at the Dubai Air Show 2019 that ended yesterday, he indicated that Ethiopian, Africa World Airlines (AWA), Passion Air, and institutional investors operating in the banking, insurance and oil and gas sector have all shown serious interest to be part of the project.

“Ethiopian is the one that we have been working with for a long time, it is looking good, it is likely we can go with them but it depends on who has the best terms for us.

We do have firm interest in term of them showing that they are hungry for the airline and want to be part of it. Some, we have signed MoU with, like Ethiopian Airlines which is serious about being a partner to us. We have our own domestic airline like AWA and Passion who are also talking to us. These are all important things that we are looking at and we are hoping that we can get the right ones to come onboard quickly,” he said.

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He added that: “The institutional investors in Ghana, banking & finance, Insurance, oil and gas companies are all interested but until we finalize this and launch it, we will not be prepared to get those who are interested to contribute their funds, whether is cash equity or equipment leasing arrangement. We have not closed the door on any particular partner for now.”

Government plan to facilitate the setting up of a new home-based carrier has seen its emphasize that it will only hold a 10 percent interest in the new entity and invite private participation.

In an initial Memorandum of Understanding signed with Ethiopian Airlines (ET) in May to be the strategic partner, government said ET can hold up to 49 percent stake. Of the majority 51 percent stake, 10 percent is to be owned by the state and 40 percent offered to individual and institutional investors.

Need for a new home-based carrier

The Letters of Intent, signed at the on-going Dubai Air Show 2019 in the United Arab Emirates involves the purchase of six (6) Dash8-400 turboprop planes from Canadian manufacturer De Havilland Aircraft and three (3) Boing 787-9 planes from American Multinational Company Boeing is to actualize the dream of making Accra a hub in the sub-region.

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A recent Airbus study predicted that Accra and Lagos will become airline megacities in the next two decades. This means that they will handle about 10,000 more long-haul passengers a day.

However, there is a dearth of domestic and regional airlines to serve the over 350million people in the region and the millions more who visit per year.

The  International Monetary Fund (IMFGhana’s economy is expected to perform strongly because of its ability to return to private capital flows, which are an important source of financial funding .

Sub-Saharan Africa is showing a solid macroeconomic performance, with many economies now growing at rates close to their pre-crisis average. Nigeria is slightly slower in its growth rates, reporting a smaller-than-2 percentage point difference from pre-crisis levels. Ghana, on the other hand, is one of the continent’s fastest growing.

Nigeria and Ghana are headlining growth in West Africa, but it is mainly being captured by foreign (USMiddle East and European) carriers in the absence of financial stable and internationally competitive local airlines, a recent Centre for Aviation report noted.

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