US embassy cable - 02LAGOS1870

UNCLAS SECTION 01 OF 02 LAGOS 001870 
 
SIPDIS 
 
 
E.O. 12958: N/A 
TAGS: EAIR, ECON, NI 
SUBJECT: FUTURE OF NIGERIA AIRWAYS 
 
 
1.  (SBU) Summary: The wetlease agreement of Nigeria Airways 
Limited (NAL) with 
Air Atlanta Icelandic (AAI) was set to expire on September 
19, but was extended 
at the last minute.  The Ministry of Aviation had hoped until 
the last moment to 
replace NAL with a new national carrier, Air Nigeria, through 
a joint venture 
agreement with the UK-based Airwing Aerospace Limited (AAL). 
Because Nigeria 
lacks ICAO's Category I safety status, however, NAL would not 
have been able to 
fly alone into the United States.  In addition, Air Nigeria 
could not have begun 
operations on September 20 because the U.S. Federal Aviation 
Administration has 
not received documentation from the new airline.  Moreover, 
an inter-ministerial 
committee formed to advise the GON on the legitimacy of the 
proposed joint venture 
has yet to begin deliberations.  Had NAL failed to extend its 
current wetlease by 
September 20, operations on the popular Lagos-New York route 
would have been suspended. 
The Ministry of Aviation has dodged that bullet, but still 
has a politically difficult 
row to hoe before Air Nigeria can lift off.  End Summary. 
 
 
2. (U) On September 17, Abuja-based ECON FSN Specialist met 
with Tony Anufor, Special 
Assistant to the Minister of Aviation, who asserted knowing 
nothing about plans 
to extend NAL's wetlease.  Anufor confirmed, however, that 
preparations for the new 
carrier have been put on hold pending the recommendation of 
the inter-ministerial 
committee that will review the proposed joint venture. 
Initially, the Ministry had hoped 
that Air Nigeria might have begun operating on September 20 
under the joint venture 
agreement.  Under it, the GON's equity share would have been 
51 percent, secured 
through the liquidation of NAL assets.  Officials from the 
Nigerian Civil Aviation 
Authority (NCAA) informed EconOff that Airwing had planned on 
Singapore Airways' managing 
the operations. 
 
 
3. (U)  Early September 18, Chris Aligbe, Public Affairs 
Manager for NAL, informed 
Lagos-based EconOff that NAL intended to continue its 
Lagos-New York operations 
through an extension of NAL's actual wetlease.  NAL's 
Managing Director hoped to 
secure a deal with AAI within two days.  Aligbe expected the 
extension would be 
in effect until Air Nigeria receives GON approval of the 
joint venture and acquires 
FAA-approved equipment and crew.  Late September 18, Aligbe 
informed EconOff that 
Nigeria Airways had just extended its wetlease agreement with 
Air Atlanta, presumably 
until the issue about Air Nigeria is resolved. 
 
 
4.  (SBU)  The future of the Air Nigeria deal remains 
uncertain.  After hearing of complaints by the Bureau of 
Public Enterprises, President Obasanjo established 
a twelve-person committee to review the agreement.  Members 
of the committee include 
representatives from the Ministries of Justice, Finance, 
Aviation, and the Bureau of 
Public Enterprises (BPE).  The BPE argues that the Ministry 
is challenging the 
BPE's privatization authority.  Contacts report that the BPE 
is engaged in discussions 
to sell NAL to a South African group.  This issue will most 
likely be reviewed by the 
committee, whose deliberations were to have begun on 
September 16, but were delayed 
until September 20 owing to the ongoing voter registration. 
Denying press reports that 
the committee is investigating the Ministry of Aviation's 
actions in the deal, the 
Minister's Special Assistant characterized the accusations as 
"evil schemes of people 
who do not like (Minister Chikwe)." 
 
 
5. (SBU) Comment:  Even if President Obasanjo has signed off 
on the joint venture agreement, as 
Minister Chikwe contends in the press, Air Nigeria's future 
is uncertain.  The inter- 
ministerial committee must review the agreement to ensure 
that it meets governmental 
guidelines, and the BPE is likely to recommend against 
approval.  End Comment. 
HINSON-JONES