Virgin in talks to sell out of Nigeria

By Matthew Green in Lagos

Published: August 19 2008 19:00 | Last updated: August 19 2008 20:00

Virgin Atlantic is in talks to sell its 49 per cent stake in Virgin Nigeria, which it set up in 2005, following an increasingly acrimonious dispute with the Nigerian government over the location of the loss-making west African carrier’s domestic operations.

Sir Richard Branson, president of the UK longhaul carrier, on Tuesday accused the authorities of using “Mafioso-style” tactics to force Virgin Nigeria to move services from the international terminal in Lagos, the commercial capital.

“It is regrettable that events have caused us to review our shareholding and whether it is appropriate that the Virgin brand should remain linked to Virgin Nigeria,” Sir Richard said.

Virgin Nigeria was hailed as a symbol of investor confidence in Nigeria when it was set up by Virgin Atlantic and Nigerian institutional investors, in part to meet demand for a reliable carrier given the country’s poor record for air safety.

Virgin Atlantic claims that the government reneged on a deal signed under Olusegun Obasanjo, the previous president, that let it use the international terminal for all services.

The administration of Umaru Yar’Adua, who took power in May last year, says Virgin Nigeria’s claim is not legally valid.

Virgin Atlantic’s criticism echoes accusations by companies including Royal Dutch Shell and Mittal Group, which accuse the government of tearing up contracts signed under its predecessor.
:bash::bash::bash:

Sir Richard claimed thugs were sent to smash up Virgin Nigeria’s domestic lounge this year. “The behaviour of the authorities was similar to the way the Mafioso behaved in the US in the 1930s and not what I would have expected from the authorities in Nigeria,” he said.

“If Virgin Nigeria can be treated in this way, can any company in the world seriously consider investing in Nigeria in the future?”

Aviation authorities forced Virgin Nigeria to relocated domestic flights from the international terminal at the Murtala Muhammed airport in the past week.

The airline says a court appeal against the decision is pending. Virgin Atlantic said it had been in talks with potential purchasers for its stake in Virgin Nigeria for several weeks.

Virgin Nigeria says it needs to operate both international and regional services from the same terminal to ensure smooth services for transit passengers.

When Virgin Nigeria was created in 2005, it was seen by the Virgin group as a potential model for its aviation interests in developing countries.

The group has airline interests in the UK, Australia, the US, Belgium and Malaysia.

Copyright The Financial Times Limited 2008

Damn, what is behind all this again?:ohno: This is very frustrating to read!

What else can Yar´Adua do apart from tearing up contracts signed under Obasanjo´s era?! If he had taken over in 1999, Nigeria would still be sitting on its debts and not even started building up foreign exchnge resserves! This is just ridiculous!

Really I am happy when he is gone in the next elections, these are four lost years with this guy in office!

What is wrong in asking Virgin to carry out its domestic Operation from the New and Ultra Modern MM2 if it poses a security risk? If MI5 or FBI or the British and American Government ask Virgin to relocate from Heathrow Terminal 3 to 4 or From JFK Terminal 1 to 2 (don't know how they name their Terminals in US) will they resist? They will never resist no matter what kind of agreement was signed in the past. Branson should stop using cheap blackmails in trying to make Nigeria look like a slave to him. He should go to blazes for all I care. They treat Nigerians like shit in their flights and then wants to tell us how run our Airports.

Everybody knows that Mittal Group didn't follow due process in the Ajaokuta deal...it was all fraud!! Ajaokuta have gulped tens of billions of Dollars and was sold for a mere 5 millions Dollars...Profit oriented eh?

As for shell...nah...they should go Iraq like they said...Taliban will not condone their rubbish. They have a had nice, smooth and steady long run to the detriments of Nigerians.

virgin is acting dumb to me. domestic operations belong at the domestic terminal if other airlines can do it they can to.i dont see whats wrong with mma2. i think its way better than mmia. they were complaining its not safe. after faan spent there money to fix the problem and get it approved for international standards, virgin is make more excuses to stay out of the teminal. if virgin doesn't like the airport then they should make thee own terminal.

I read somewhere that the Virgin groups stake in Virgin Nigeria is worth only $25million!!! I think Mr. Branson is throwing a hissy fit, with his statements one would have thought his investment was worth $250million or more.

I do not think he has invested enough in the Nigerian economy to expect the government of the country to bend over backward to please him.

Branson is being a pain, but he has a point. It will be cheaper for Virgin to operate from one terminal, and if that was in the contract with the government, then it's in the contract.

What is wrong in asking Virgin to carry out its domestic Operation from the New and Ultra Modern MM2 if it poses a security risk? If MI5 or FBI or the British and American Government ask Virgin to relocate from Heathrow Terminal 3 to 4 or From JFK Terminal 1 to 2 (don't know how they name their Terminals in US) will they resist? They will never resist no matter what kind of agreement was signed in the past. Branson should stop using cheap blackmails in trying to make Nigeria look like a slave to him. He should go to blazes for all I care. They treat Nigerians like shit in their flights and then wants to tell us how run our Airports.
What "security risk" can that be? Almost everywhere else, domestic and international flights can comfortably originate from the same airport terminal.

Anyway, while I understand some of the nationalist reactions, I think that our national interests are better served if we develop a reputation of honoring our agreements.

They never invested much anyways...meh

It is all well and good Virgin Nigeria Investingin in Nigeria when they did, it also means that they have to follow the rules xof the host country. Virgin might have a single paper arrangement with the Minister for Aviation at the time, but thfis arrangement was not part of the MOU. I think it is dispicable of a company such as Virgin to begin to descredit Nigeria because they think they can do so. I am of the opinion that they will be a company that will take the stake adn do a good job Ardios Virgin:lol::lol::lol::lol:

What "security risk" can that be? Almost everywhere else, domestic and international flights can comfortably originate from the same airport terminal.

Anyway, while I understand some of the nationalist reactions, I think that our national interests are better served if we develop a reputation of honoring our agreements.

What security Risk you ask? And nationalist reactions you said. What makes Virgin different from Arik, Chanchangi, Aero Contractors etc...Nobody is stopping Virgin from Operating its international flights from MM1 but MM2 as it is being used is for Local Operations Period!!! How do you want the others that complied with the order to feel? Why is Virgin the only airline complaining?

As for your statement..''nationalist reaction''...Let me give it to you this way. We are in the 21st century and not in the 18th century. We are independent and not still under colonial rule. OK?

I think that virgin should be shown the door. I was never in support of this agreement in the first place. I can only label baba as "Akotileta", meaning selling your goods on the cheap to foreigners. Lets ask for a minute, are there no Nigerians in the world that could have done better at the time this contract was signed? Arik Air came on the scene over a year after Virgin, see the strides that they have achieved. I can say that Virgin can go, there will be another company to fill their place. Mattias, do not take FT too seriously, they are a propaganda tool for the UK (I live in the UK, so I know what I am talking about).

But the Virgin Nigeria is currently operating its domestic flights from the MM2. I see no reason for the operation not to go on successfully except it`s meant for the destruction or disturbance of the nation aviation.

Meanwhile, Richard Brason must be shown respect because he has taken the risk to invest in the industry when it was too dangerous for many investors to do so. It would have been difficult to find investors with great potential as Brason to invest in the formerly known honkytonk Nigerian Airways(I didn`t mean not to demean the airlines).

What security Risk you ask? And nationalist reactions you said. What makes Virgin different from Arik, Chanchangi, Aero Contractors etc...Nobody is stopping Virgin from Operating its international flights from MM1 but MM2 as it is being used is for Local Operations Period!!! How do you want the others that complied with the order to feel? Why is Virgin the only airline complaining?
What makes Virgin "different" is that others did not negotiate the same sort of agreement with the federal govt.

As for your statement..''nationalist reaction''...Let me give it to you this way. We are in the 21st century and not in the 18th century. We are independent and not still under colonial rule. OK?
Not quite sure how Virgin's arm-length agreement with Nigeria's govt equates to "colonial rule." But I recognize primitive xenophobia when I see it.

Adebayo, but Virgin doesn´t get all these problems in Malaysia, Autralia and Belgium with airlines it seems to be doing well there.

Virgin is a world brand and I´m happy when they came to Nigeria and I wonder why Virgin Nigeria is a loss-making venture as the article points out.

I do hope thatthey stay and get their problems fixed but one thing that annoyed me profusely is that this Yar´adua is tearing up all contracts. This man is a complete joke!!! Bääähh!

It is all well and good Virgin Nigeria Investingin in Nigeria when they did, it also means that they have to follow the rules xof the host country. Virgin might have a single paper arrangement with the Minister for Aviation at the time, but thfis arrangement was not part of the MOU. I think it is dispicable of a company such as Virgin to begin to descredit Nigeria because they think they can do so. I am of the opinion that they will be a company that will take the stake adn do a good job Ardios Virgin
Did the Minister sign in his personal capacity or as a representative of the Nigerian govt?

People get all caught up about Virgin Nigeria and entirely miss the big picture. Virgin will quickly be replaced and hardly be missed (although it did raise the standard for other domestic Nigerian airlines). However, the act of one administration unilaterarily reneging on the contractual obligations of the Nigerian govt contracted entered into by a previous govt is a political risk that will not so quickly or casually tossed aside and will hereinafter reflect in the 'coupon' that will be levied upon Nigerian interests in both capital market and investment circles. The civilized means to get around a bad contract is to renegotiate it, not to unilaterarily renege one's obligations.

I still insist that bringing Virgin to Nigeria was a big mistake. Let me take the London - Lagos - London route for example. Virgin Nigeria and Vurgin Atlantic operate that route, along with Belview and Arik (From November). Whilst Virgin Atlantic, BA, Belview and Arik (From November) fly from Heathrow, Virgin Nigeria flies from Gatwick. To make matters worse for Virgin Nigeria, the difference in fare with Virgin Atlantic is only 10 pounds. Ask me, will this happen if Virgin Nigeria is run by an entirely different company? I doubt it. You Virgin Nigeria only gets the crums that fall from the table. I beg to ask, why did Virgin not push for Heathrow as the terminal for Virgin Nigeria?

The brand will be a little bit confusing becuase it`s the Brits`and Brits largest airport. You know what that means when Nigeria is added to a private company name. What a great brew it gonna be. Just speaking my mind not so professionally.

What makes Virgin "different" is that others did not negotiate the same sort of agreement with the federal govt.


Not quite sure how Virgin's arm-length agreement with Nigeria's govt equates to "colonial rule." But I recognize primitive xenophobia when I see it.

Check out the meaning of Xenophobia and how it applies to a man like me living in another man's land and married to foreigner. Think before you Pick your words.

We can not because of $25mln investment let virgin tell us how to make use of our Airport. At first it was because of safety issues and after all safety tests were carried out and the airport was passed as safe, virgin started complaining about agreements.

You have not answered my question yet, will virgin complain if the American or British Government ask them to relocate to another terminal? Never!!!

Nigerian Banks and companies are all over the world and are complying to orders being passed by the Authorities of their host countries. Orders are orders and it superceeds agreement or t&c. simple!!!

^^ we've got control now

Check out the meaning of Xenophobia and how it applies to a man like me living in another man's land and married to foreigner. Think before you Pick your words.
Again, I do not get the connection between being an economic refugee abroad and being a xenophobe with an unreasonable distrust for foreigners in your own country, which is the only logical conclusion for equating an arms-length commercial agreement between a foreign company and your country's govt as "colonial rule".

We can not because of $25mln investment let virgin tell us how to make use of our Airport. At first it was because of safety issues and after all safety tests were carried out and the airport was passed as safe, virgin started complaining about agreements.
It does not matter if it was a $2 or 2 cents investment. It is simply the PRINCIPLE of the matter. However, for a govt that has recently been professing to respect the rule of law, it would be sad to discover that such rules are applied according to the size of one's purse.

You have not answered my question yet, will virgin complain if the American or British Government ask them to relocate to another terminal? Never!!!
The US or UK govt would probably never sign a commercial contract and then unilaterarily renege on it.

Nigerian Banks and companies are all over the world and are complying to orders being passed by the Authorities of their host countries. Orders are orders and it superceeds agreement or t&c. simple!!!
The host countries of banks and companies that you inappropriately cite did not enter into commercial contracts with such banks or companies. Unfortunately, you seem to confuse commercial agreements with regulatory oversight, and I suspect that is why you keep comparing Virgin's case with that other domestic airlines that did not enter into a similar commercial agreement with the govt.

Btw, I am unaware of any law in Nigeria that prohibits the operation of domestic and international operations from one terminal. In fact, the Abuja, Kano and Port Harcourt airports all operate domestic and international traffic from the same terminals. Which is yet another the "security risk" afterthought is so much blatant hogwash.

Jobless, it is understood that the government needs to honor its contracts, but it will take Nigerian lawyers to identify all the relevant parties to this matter, and to determine what the parties were capable of promising through contract. Virgin, MMIA, FAAN, the Ministry of Transport, the Lagos government, and other authorities would be involved in this matter.

You are trying to settle a complex legal situation in an internet forum, and I'm pretty sure you are incapable of doing it.

The US or UK govt would probably never sign a commercial contract and then unilaterarily renege on it.You are wrong to imply that the government is trying to unilaterally renege on a contract. Have you even read the entire contract? Do you know all of the clauses - including those related to changes to the facilities available at MMA?

Just because Nigeria is a developing country which has to watch its reputation does not mean that Nigeria has to roll over and give corporations whatever they want.

In a nutshell: this is complicated and your grand conclusions are premature and/or unwarranted.

Carver, I am not a lawyer and not trying to resolve any complex legal problem over the Internet. Ironically, the issue is already before the courts where the real lawyers are trying to resolve the "complex legal situation" when the govt decided to abort (or at least prejudge) the process by forcibly throwing out Virgin Nigeria from MMIA.

And btw, unilateral merely denotes the act of one of the two parties. It does not presuppose right or wrong.

Jobless, it is understood that the government needs to honor its contracts, but it will take Nigerian lawyers to identify all the relevant parties to this matter, and to determine what the parties were capable of promising through contract. Virgin, MMIA, FAAN, the Ministry of Transport, the Lagos government, and other authorities would be involved in this matter.

Just because Nigeria is a developing country which has to watch its reputation does not mean that Nigeria has to roll over and give corporations whatever they want.

In a nutshell: this is complicated and your grand conclusions are premature and/or unwarranted.
Furthermore, we know (at least, it is public knowledge) that there was an agreement between the Virgin Group and the Nigerian govt (represented by the Minister of Aviation) that led to the setting up of Virgin Nigeria. That is the agreement under discussion, and that would not involve every stakeholder (or "other authorities" as you put it).

It would be best for Nigeria to learn not to "roll over" during contract negotiations, and not after entering into a possibly binding contract (assuming the govt allows the courts to freely determine whether or not the agreement is actually binding). Unfortunately (or fortunately), in business parties do not get what is 'fair' but rather what they negotiate.

Again, I do not get the connection between being an economic refugee abroad and being a xenophobe with an unreasonable distrust for foreigners in your own country, which is the only logical conclusion for equating an arms-length commercial agreement between a foreign company and your country's govt as "colonial rule".

Of course, over twenty million Nigerians living abroad are economic refugees. Do you ever think that one could just decide to travel out of the country to relocate somewhere else? If a Nigerian or African decide to travel out and lives somewhere else he becomes an economic refugee or ''immigrant'' but if a westerner decide to come and live in Nigeria or Africa, he is considered an "expatriate". Well done!!! If there is anybody that yearns for inflow of Foreign Investments in Nigeria...It is me.

It does not matter if it was a $2 or 2 cents investment. It is simply the PRINCIPLE of the matter. However, for a govt that has recently been professing to respect the rule of law, it would be sad to discover that such rules are applied according to the size of one's purse.

Cmon grow up, the Government will not just wake up and tell Virgin to move without giving it considerable time to get prepared, remebemer the issue here is Virgin Nigeria and not Virgin Atlantic, the Government of Nigeria have got a stake in this as well!!! Do you think the FAAN is so dumb to ask Virgin to move or they don't know what they are doing?.The man with the lower stake is now calling the shot!!! Is that how you do business? Another Point of correction, FAAN is the body calling for relocation and not the Federal Government! FAAN is the regulatory body and also independent- as for now the case is between FAAN vs Virgin Nigeria and Federal Government of Nigeria

The US or UK govt would probably never sign a commercial contract and then unilaterarily renege on it.

Show me your copy of the agreement!!!


The host countries of banks and companies that you inappropriately cite did not enter into commercial contracts with such banks or companies. Unfortunately, you seem to confuse commercial agreements with regulatory oversight, and I suspect that is why you keep comparing Virgin's case with that other domestic airlines that did not enter into a similar commercial agreement with the govt.

Btw, I am unaware of any law in Nigeria that prohibits the operation of domestic and international operations from one terminal. In fact, the Abuja, Kano and Port Harcourt airports all operate domestic and international traffic from the same terminals. Which is yet another the "security risk" afterthought is so much blatant hogwash.

It doesn't have to be a law and shouldn't have to be enshrined in the constitution...it may be in the ''FAAN act'' because they are the regulator.