Business News of 2014-08-29

Government justifies establishment of national airline

Government has defended its decision to establish a national airline.

According to the Deputy Minister of Transport, Joyce Bawa Mogtari ,“remember that this route is a very, very viable one , for now we have 41 national carriers plying this route , why can we not put our national carrier back in the sky to compete with the existing businesses(?)”.

Government’s move to go ahead with the establishment of the airline, is despite a warning by a former chief of staff Kwadwo Mpiani that, it is not economically viable.

Kwadwo Mpiani last week slammed government on its moves to establish a national airline.

He told Citi Business News the industry is highly competitive and a state owned airline will not survive.

This is Ghana’s third attempt at running a national airline.

The previous two collapsed due to debt and mismanagement.

Founder and Chairman of Antrak Group, Alhaji Asuma Banda, has also threatened to drag government to court if it goes ahead to establish a new national airline.

“If the government goes ahead to establish a new airline, I will challenge them in court. We have no money to throw away. It won’t work,” he said.

Last week government contracted audit and advisory services firm PricewaterhouseCoopers (PWC) as the transaction advisor for the project.

PwC will among others undertake various business studies to determine the viability, ownership structure, develop various models and evaluate bids for the establishment of the new national airline.

The process, which is expected to take 13 months, is being financed using part of a US$30million Public-Private Partnership Programme facility from the World Bank.

Justifying government’s move to establish the airline the deputy minister of transport Joyce Bawa Mogtari said “the original Ghana Airways Company Limited was actually a viable company, making profits for many, many years until it was liquidated. The second one, which is the Ghana International Airline and the now defunct company that we are talking about didn’t succeed because it was not properly structured”.

Source: Citifmonline.com
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