US embassy cable - 04ACCRA1786

UNCLAS ACCRA 001786 
 
SIPDIS 
 
SENSITIVE 
 
DEPARTMENT FOR EB/TRA/OTP -- BIRIGITTA MATTINGLEY 
DEPARTMENT PASS TO DOT AND FAA 
 
E.O. 12958: N/A 
TAGS: EAIR, GH, aviation 
SUBJECT: GHANA AIRWAYS HAS NEW AMERICAN PARTNER 
 
 
1. (SBU) SUMMARY: The GoG appears to have made a bold move to 
save Ghana Airways.  Minister of Roads and Transport Richard 
Anane told EconOffs the GoG will sell a portion of Ghana 
Airways to a group of American investors headed by SkyWest 
founder and board member Ralph Atkin, known as Ghana 
International Airways (GIA).  The Minister did not address 
the future of the airlines oft criticized employees. Ghana 
International Airways claimed a week ago that all employees 
would have to be sacked as a pre-condition of the deal.  END 
SUMMARY. 
 
2. (SBU) EconChief and Econoff spoke with Roads and Transport 
Minister Anane about the conflicting stories surrounding a 
deal between GIA and the GoG for Ghana Airways.  According to 
the Minister, GIA officials, including SkyWest founder Ralph 
Atkin met with President Kufuor and his cabinet Saturday, 
August 21, to hammer out a deal.  The Minister confirmed that 
local media reports of a deal were accurate.  The details 
outlined in the press reports track almost word-for-word with 
what a GIA representative told Econoff last week. 
 
3. (U) According to all sources GIA will hold a 30 percent 
stake in the new Ghana Airways while the GoG retains 70 
percent. The Minister stated that GIA would be given a "free 
hand" to operate the airline for 90 days.  To affect this the 
GoG will assume the airline's 162-million-dollar debt and not 
intervene in the management of the company for 90 days.  GIA 
is expected to reorganize and lease new equipment during that 
time.  To cover operating costs during this time of 
"exclusivity" GIA and the GoG will put up USD 2.1 and USD 4.9 
million in cash, or 30 and 70 percent of USD 7 million, 
respectively. 
 
4. (SBU) At the end of 90 days GIA is expected to inject an 
additional USD 55 million into the airline.  The report makes 
no mention of any additional investment by the GoG.  However, 
GIA's representative said that the GoG would contribute about 
the same amount at the end of 90 days. 
 
5. (SBU) Ghana International Airways' representative was 
emphatic that GIA would maintain full control as the GoG's 
interest in the company is reduced to 10 percent of total 
shares over the next five years.  The media and the Minister, 
however, were silent on this issue, although the Minister 
agreed the GoG's long term plan was to float its shares on 
the Ghana Stock Exchange. 
 
6. (SBU) Last week GIA's primary concern (aside from the 
outstanding debt) was the current 1700-person workforce. 
Ghana International Airways indicated there would be no deal 
if the GoG did not fire every employee.  The Minister claims 
that some cuts will be made before GIA takes over to "show 
good faith" and prevent GIA from "looking like the bad guy". 
He did not, however, indicate that the cuts would be drastic. 
 It is unlikely that GIA would have dropped this position 
completely since it was a cornerstone of its plan to move 
forward with nothing more than Ghana Airways' name and some 
exclusive routes. 
 
6. (SBU) The big question is this:  Who controls Ghana 
Airways at the end of 90 days?  Time and again Ghana Airways' 
problems have been blamed on political meddling and outright 
cronyism, with good reason.  The GoG has proved repeatedly 
over the last few years that it is incapable or unwilling to 
undertake the necessary but politically difficult steps to 
restructure Ghana Airways.  GIA has no intention of entering 
any deal that allows any such interference, but whether they 
can come up with an agreement that will keep those with 
political interests at bay remains to be seen.  In terms of 
attracting passengers, reliable, safe service may be no 
substitute for the super-sized luggage allowances and 
back-door freebies that Ghana Airways has provided for 
personal and political friends.  West Africa's only direct 
routes to the U.S. are a prize that will be cumbersome if it 
brings the rest of Ghana Airways' considerable baggage. 
YATES