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Business News Thu, 24 Mar 2005

Ghana International Airlines Deal In Danger?

GIA At Critical Stage Appeals to Govt

Ghana International Airlines has already published its summer schedule, take off is not fully assured, for, the Government of Ghana has to deposit its contribution to Ghana International Airlines and sign the shareholder's resolution regarding the term sheet and business plan this week or else a major part of the deal will fall through.

An industry source told ADM, "there is an absolute immediate urgency for the Government to pay this amount this week." Displaying great optimism, another source disclosed that the money would go through this week because "we have assurance that the Chief of Staff will give the okay before we break for Easter."


President Kufuor is said to be eager to get the airline flying because that's one legacy he wants to leave before his term runs out. But if for some reason the payment is held up, some of the problems that would occur would put the entire project in jeopardy.


For example the timetable for starting flights would be compromised. GIA requires a minimum of three months from completion of fundraising to complete the certification and training process for the new aircraft.


Any delays in moving forward will delay the start date, which in turn will allow competitors to take over the market.


Another serious setback would be that London Heathrow slots would become unavailable.

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A GIA delegation made tremendous progress during the bilateral air service talks in the UK last month.


If there is no deposit made by this week and GIA cannot make the commitment talks scheduled in London on March 30, then GIA will not be able to operate to London Heathrow until at least Winter 2006.


Critically, aircraft will become unavailable because GIA cannot make firm commitments to acquire these aircraft until the outstanding issues of cash are resolved.


Other airlines are seeking the same aircraft that GIA is after and if the company cannot sign a commitment by March 31, it is certain that one of these aircraft will no longer be available.


Already, many key members of the management team are reconsidering their commitment to the project due to the delays, and potential investors are said to be getting jittery.

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Credibility, which is a major element in any business transaction, stands to suffer as well if the main partners in the deal dither. When accusing fingers point at them and the badge of "unreliable" is pinned on them that already stigmatise the new airline.


Continued delays with vendors, codeshare partners, who cannot proceed with signing agreements means that GIA cannot afford to commence operation. And even if it does, after a long delay, then it would be as a carrier of unreliability and delays.


Already, venomous rumours on the deal are doing the rounds on a number of websites and doing damage.

Source: ADM
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