The apex aviation regulatory authority, Nigerian Civil Aviation Authority (NCAA), has stepped into the financial crisis rocking Virgin Nigeria, with a view to identifying and settling the airline’s face-off with its creditors. To this end, NCAA has summoned Virgin Nigeria, Guarantee Trust Bank (GTB) and United Bank for Africa (UBA)-its creditors, to explain the new twist to the airline’s problems.
Harold Demuren, director general, NCAA, told BusinessDay on phone that the regulatory agency was concerned by the airline’s new challenge, adding that in an attempt to promote safety, the legal department of the agency would hold a meeting with the three firms this week.“We are concerned about safety and that is our watchword. We will not allow anything or process that will truncate the safety of airline operations and the travelling public. Our legal department is summoning them now to a meeting. They have to explain what really is the problem and then we move forward,” he said. Demuren had last week declared that the agency would not hesitate to ground any airline, especially Virgin Nigeria and Aero, which are currently embroiled in financial crisis, if they were found to be operating below safety standards.
“But the regulation is very clear and that is if we discover that the airline can no longer operate safely, we will shut them down. We are on top of the situation to ensure that safety is not compromised,” he had said. Experts, meanwhile, have also warned that if Virgin Nigeria and its creditors are unable to resolve the claims and counter claims over debts and acquisition of the airline by a Nigerian businessman last month, travellers may begin to lose confidence in the services of the airline.
Sam Akerele, an aviation consultant, advised that there was a need for both parties to immediately settle the rift “in order not to erode passengers’ confidence in the airline.” Chris Aligbe, another expert, expressed fear that the reality was gradually dawning on Nigeria, as the airline may stop operations if the crisis was not well managed. “GBT has the right to ask for its loan but there was a mistake somewhere. However, sooner or later, the industry will run into trouble,” he projected.
Virgin Nigeria, also known as Nigerian Eagle Airlines, which many thought may have been out of the woods after it was bought over by NICON Group of companies led by Jimoh Ibrahim last month, may be facing another crisis as Guarantee Trust, one of its creditors, has allegedly placed a caveat on the airline claiming “outstanding indebtedness.”Solicitor to the bank, Kunle Ogunba Esq, SAN, claimed that as a result of the debt, “the Federal High Court on July 8, 2009, granted an order of injunction….. there is ‘a winding-up petition against Virgin Nigeria in suit FHC/L/CP/665/2009 pending within the bosom of the Federal High court’, which covers the entire assets of Virgin Nigeria, placing caveat emptor on the airline.
Virgin Nigeria allegedly got a loan of $15million from GTB, which serviced about $9million. However, in a swift reaction to the GTB suit, Virgin Nigeria disputes the loan on which the bank premises its claim, to the extent of calling for wind-up, maintaining that it had immediately challenged the ex parte order received by GTB and adding that by law, it no longer subsists since July 22, 2009.
“Virgin Nigeria Airways Limited not only disputes the alleged loan forming the basis upon which the winding up Petition has been presented, but also asserts that under the law the proceedings are wholly incompetent. Consequently, there are various applications challenging the jurisdiction of the court and seeking appropriate orders striking out the said Petition in its entirety.“The order referred to which was obtained ex parte, that is without requisite notice to Virgin Nigeria Airways Limited, was immediately challenged and has by law no longer subsists since July 22, 2009.
“We therefore advise the general public to completely ignore the said Notice which was made in absolute bad faith and designed to undermine the court processes. We wish to assure the general public and in particular our esteemed customers and partners that we remain strong and very solvent and shall continue to render first class services to the general public,” the airline said.