After the successful turn around of Air Nigeria (formerly Virgin Nigeria), with its fleet growing from just two to 12 in two years, the airline has suddenly found itself facing a completely different challenge – strikes and petitions by employees. A particular petition that the airline is in financial crisis led to its grounding by the Nigeria Civil Aviation Authority. The petitioner also accused the airline management of diverting the Aviation Intervention Fund it obtained from the Bank of Industry. In this interview with LAURENCE ANI and YEMI ADEBOWALE, Air Nigeria’s Chairman, Dr. Jimoh Ibrahim, debunks all the allegations, attributing its recent problems to “disgruntled employees” affected by its turn around strategy, “who could no longer steal from the company.” The billionaire businessman says Air Nigeria won’t return until the issue of staff loyalty is resolved. Excerpts
Recently, you placed an advertisement in which you alleged that somebody or some organisation was trying to initiate a forced merger between Air Nigeria and some other airlines. Can you be more specific about that?
We have been seeing reviews in some newspapers about plans to merge some airlines to form a national airline. I initially regarded it as a rumour. Then later, Air Nigeria’s managing director came to show me a photograph of an aircraft painted in the Nigerian colour and posted on the Internet as the new national airline. The next thing I heard was that Arik and Aero were being bailed out by the Asset Management Company of Nigeria and that they wanted Air Nigeria to join them, so that the three airlines could become one. Then, I said it was not possible to force us to merge with another airline. Besides, if they want us to merge, they should come and talk to us directly. Again, airline business is not done like that. You can’t force airlines to merge. There were all sorts of sponsored analysis in the newspapers about some European airlines merging, and all that. You can’t force a merger. Take for instance; airline A is operating with Boeing/CRJ 900 and Airline B is operating with Embraer/Boeing while Airline C is operating with Fokker. Now, if there is a forced merger, how will the head of maintenance do his job? There will be accidents. There is also the issue of who the driver would be in a merger. Until Tony Elumelu stood up to drive Transcorp, the firm was gasping for breath. It was almost dead. It operated for six years with six different managing directors. A corporation must have a driver. If I sell my shares in Air Nigeria and get the money, it will be good for me. But what about the interest of other Nigerians? The interest of safety is also key. What are they trying to merge? Imagine another scenario where airline A has 60 percent of its fleet leased; airline B owns all its aircraft while airline C is operating with about 50 percent of its fleet owned. If there is a merger and the lessor says ‘you did not tell me that you will lease my aircraft and merge it with other airlines’ and goes ahead to cancel the lease agreement. What will happen to the other members in the merger? A merger should be properly negotiated. If we do not agree, we won’t go ahead with it. If they try to force us, we will remove our investment from Air Nigeria and you will see what will happen. It will go down; people will lose their jobs and the economy will be affected.
What do you consider the way out of the crisis in the Nigerian aviation sector considering the huge debt of the operators?
There is no threatening debt in the sector. People are just raising unnecessary alarm. You have an airline owing N39 billion and you say that airline is in trouble. That is not correct. That N39 billion can’t buy a brand new aircraft. The airline has 13 planes and some people say a debt of N39 billion is a problem. This is not correct. The debt is less than 10 per cent of its asset. It also has a refinancing gap of 12 years. So, where is the crisis? The truth is that people don’t understand the aviation industry. If I buy four new Boeing 707, it will cost about $1 billion. Can the federal government afford to buy this? The private businessman running the airlines knows how to access US EXIM loan; pays 30% of the cost and get all the four new planes into his fleet. The job of government is to provide an enabling environment to do our businesses not competing with us. Again, how will the regulators call a government-owned airline to order? If the government-owned airline fails to pay flying charges who will ground it? They could not even regulate the defunct Virgin Nigeria the way they are handling all of us now. When Nigeria Airways was there, you saw what happened with the regulatory agencies. They will only do their jobs dispassionately if the airlines are not owned by government.
Are you speaking in the Nigerian context, because elsewhere we have regulators doing their jobs very well despite government stakes in some of the airlines?
We are flying in Nigeria and everything we say must be in the Nigerian context. We work within the Nigerian environment.
As at this moment, Air Nigeria is still grounded on the domestic routes. NCAA says the airline is in financial crisis. Is this true or is there something Nigerians don’t know about this alleged financial crisis?
If indeed NCAA said that in writing, then it is a regrettable statement. NCAA has not financially audited Air Nigeria. So, how will they come to that conclusion? Even CBN, before the hammer of some banks in 2009, first sent auditors there to do a thorough job. They brought out the result of the audit and used it to attack the banks. If NCAA has not audited our accounts, how did they come to that conclusion? We have since gone to NCAA with documents to say that we are not financially distressed. I have letters from the NCAA telling us that they have noted our financial position based on the documents submitted. They say we have demonstrated that we are financially strong. Air Nigeria’s problem is not about money but about its staff. We don’t have financial problem. Money is not our problem but the staff. For instance, somebody within our system can just send a letter to the NCAA, telling them about things that are not true. From that kind of mail, NCAA would want to see what is happening. Our problem is our people and it boils down to what is called staff loyalty. The staff we inherited are the same staff Richard Branson walked away from. I don’t like sacking people. I felt the turn-around will take two years and that the human resources should follow and then try to see how we can change the orientation. What we realized was that after blocking all those loopholes that led to the distress of Virgin Nigeria, the staffs perpetrating the atrocities became disenchanted. I don’t really believe that we should sack them, though my managing director believes that if we sack them, we will have our peace. Since we took over the airline in the national interest, I believe that we should keep the staff and try to change their orientation. NCAA has no problem with us.
But you are still grounded on the domestic routes?
It does not matter. We are flying Lagos-London everyday. We will resume our domestic routes as soon as we are able to solve the issue of staff loyalty. We don’t have to be in a hurry to fly. Mind you, this is aviation. Staff royalty is important. These disgruntled staffs can go and plant a bomb in out plane
But NCAA has not written to say that you have been cleared to fly the domestic routes?
How did you know that? I have a letter from the NCAA saying that we should do some things and resume operation after doing them. This is something I can do within an hour. The problem started when the pilots and engineers went on strike for May salaries. Our argument was that it did not make sense to go on strike when the month has not even ended. They said if they don’t get their salaries by May 31, they will go on strike the next day which was a Saturday. They did. We had paid about 45 percent of the salaries before they went on that strike. NCAA wanted to intervene but I told the MD not to attend such a meeting. We also need to show NCAA that we have the right type of staff or not. If they sort our the problem for us, it will re-occur. We have decided to face it once and for all. When they called off the strike in May NCAA also spent some few days looking at our planes. That also fell on a weekend. NCAA can’t work without documents. In the process, we lost another one week. NCAA then gave us a clean bill to resume operation. When we resumed operation, one of the staff started writing petitions again. This is staff disloyalty. We have to sort out this aspect before we resume flying. This is not a government company. Under labour law, one of the industries prohibited from going on strike is the aviation industry. Even the NLC gives notice before going on strike. I have told them that I may stop further investment in the airline if the staffs continue to give us problems. I am supposed to put another $100 million into this airline. But how am I sure that they will not ruin this with strikes. All the investment will be on the tarmac. The investor has to be sure that this kind of behaviour will not repeat itself.
If you don’t inject funds because of the issue of staff loyalty, will this not compromise standard?
I said we would not inject new funds until the employees assure us of their loyalty. They must learn from this. You saw many of them in my office today. They came to beg me. The management also came to assure me that they have learnt from this, promising that it won’t happen again. Our customers believe in us. We are the safest airline according to IATA standards. We don’t want to leave any stone unturned.
This disloyalty seems traceable to staff welfare. One petitioner claimed that their taxes and pension deductions were not being remitted. Is that correct?
Where were their deducted taxes and pensions when Richard Branson was running the company? Where were all these remitted? Why is the FIRS just coming now? Where were they all the while? When taxes are not remitted, you take it up with management. When they came here and complained, we gave them documents to show how much PAYE we have remitted to the Lagos State Government since we took over. It is over N300 million. If we have paid this much in the last two years, they should simply go to the tax authorities to ask for their certificates. That’s not enough reasons to go on strike. We showed them evidence of remittance. We also still owe Lagos State Government because of the six-year back log. It is not enough reason to go on strike. For the pension, we have been remitting since we came in. For the old ones, we have to discuss and agree on how to pay that. They did not disturb Richard Branson when he was in charge. We don’t own the company 100%. If it is owned by us 100%, then you can now be talking about inheriting the entire assets and liabilities. There must be understanding. It is a case of external influence and we stand by it.
You don’t regard the debt of the Nigerian aviation as a big deal. But accepting the Aviation Intervention Fund seems an acceptance of distress in the sector?
Government said if any bank has given a loan to any airline and the loan is a burden for the airline, the airlines should come and refinance the debt through the Bank of Industry. This is to remove systemic problems. They don’t give cash. It is book-to-book. I am very happy that the CBN, BoI and UBA have explained how the loan works. Nobody is giving cash. In the case of Air Nigeria, we refused to even access working capital which is available in the Intervention Fund. We have been using funds from our other companies as working capital. We have been able to grow the airline from just two aircraft to 12 within two years. We should learn to appreciate people doing great things in this country. You don’t just wake up to say that Richard Branson left 51 percent and that government should go after this. What do they want to pursue? If you want 51 percent of air Nigeria, bring the money and we will give you the shares. Let them come and pay 51 percent liabilities of Air Nigeria and then pay 51 percent of the working capital. Those who are saying that their father owns 51 percent of Air Nigeria should come over and meet all these requirements. If I am to restart local operations today, I will have to put in over $10 million. Some of those making these statements are uninformed or deliberately being mischievous. It is just petty jealousy. They really don’t understand what aviation is all about.
Sometime ago, you expressed regret going into the aviation industry based on your experience with the defunct NICON Airways. You said it was a money guzzler; but it’s a surprise you’re back in it?
No, don’t quote a statement I didn’t make. I never said that I regretted going into the sector. I did not regret the investment. If I have ten investments and one is not working, am still an A candidate. Business is about profit and loss. The issue with NICON Airways is that we did not have enough shares to control the board. At that point, we had 60 percent and Captain Wada had 40 percent. Wada wanted us to buy aircraft while we wanted to lease. So, there was no agreement. It had nothing to do with staffs. The problem at Air Nigeria after our successful turn around was with the growth strategy. It is the post-surgical management. We gave them instructions on what not to do. Our staffs are the problem and that is where we are today. Nobody else is causing problems for Air Nigeria but our staffs. Before anybody can put us into trouble, the person must use Air Nigeria’s people. Staff loyalty must be addressed. The faster we do this, the better for us. If Jimoh Ibrahim has invested over $60 million in this airline without any return and I am still interested in putting in another $100 million from our group assets, then staffs should not complain about minor things like salaries being delayed for just two days. We are a group. If company A in the group has excess cash, it gives to company B that needs cash. It is inter-company borrowing, which is acceptable anywhere in the world. That cannot be a fraud. This airline is not indebted to any bank apart from the intervention fund. We don’t go around borrowing. If we have managed it very well, why can’t the staff be loyal?
At the Senate public hearing on the aviation sector, some senators claimed that you diverted the Aviation Intervention Fund for personal purpose. Do we expect another tale of unwholesome demand?
In the National Assembly today we have only very few people with integrity. Things are happening there that are very questionable. I don’t want to create another problem as to whether they asked me for bribe or not. At the appropriate time I will talk. I don’t want to create another Otedola scenario. If there is pressure on me, at the appropriate time, I will speak. Secondly, well-informed people were laughing when the senators were making those allegations. The fact remains that as at the time we made those transfers which they said were diversions and money laundering, there was nothing like Aviation Intervention Fund. Some legislators behave as if they are not educated. I went to the hearing because my name was mentioned. While I was seated there, the chairman was making all sorts of false statements based on a petition by a former staff who stole our money. Why should they downgrade themselves so low, as to be taking evidence from an accused person? What kind of madness was that? The weight of evidence from an accused person is weak. Whenever anything involves Jimoh Ibrahim it makes very big headlines. Unfortunately, this is not a country where one can easily get justice. I should be commended for what I am doing with Air Nigeria. Were you not in the country when GTBank took Virgin Nigeria to court for winding up because of huge debt? It was at the point of winding up that I bought it, saving thousands of jobs. I paid GTBank $11 million. My group employs over 28,000 Nigerians. That is not a small number. I should be encouraged.
But aren’t there things you may have done wrong to warrant such disloyalty from your employees?
It was because during our turn around, we blocked holes through which some of them were stealing. As a result, there has been resistance. It is not enough to go on strike because of two-day delay in salaries. I know an airline owing six-month salaries and the workers have not gone on strike. Another one owes three-month. The employees are still working.