Taking the Virgin Out of Nigeria

Jun 12, 2009

More Reading on This Topic: Virgin Nigeria

Uh oh. It looks like Richard Branson’s foray into the African airline market is coming to an end. Virgin Nigeria will no longer be using the Virgin name, and Branson’s affiliation with the airline will be ending. Now, other than chaste Nigerians, the only virgins in the country will be a daily Virgin Atlantic Airbus from London.

The end of this relationship just shows how hard it can be to do business in Africa. Virgin Group’s relationship with Nigeria swayed with the changing winds of power. Under one regime, all was good yet under the next it became a nightmare. And the airline itself has been far from a beacon of stability.

In its short life, Virgin Nigeria has flown only 18 airplanes. So you might be surprised to know that those 18 airplanes have been split between A320s, A330s, A340s, ATR 42s, 737s, 767s, Embraer 190s, and Fokker 50s. Originally, they planned on serving domestic, regional, and long haul routes. But now, they’ve given up on long haul entirely and they’ve decided to center their fleet around the Embraers for regional routes. We’ll see if they even stick to this fleet long enough to take delivery of all of them.

It’s not really a surprise that Branson would be frustrated. What was once a promising partnership will now be dissolved, as soon as Virgin can sell its stake. Meanwhile, the airline will continue to operate but under a new Virgin-free name.

Brett

9 responses to “Taking the Virgin Out of Nigeria”

David SFeastbay

Jun 12, 2009 at 8:15 am

Somethings can’t work and you have to know when to get out when it doesn’t. To bad since you would think with a power name like Virgin that it would have a chance in an area of the world that always has had problems with airlines coming and going. The Virgin brand would be more stable and draw traffic just on the reputation alone.

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Jay

Jun 12, 2009 at 2:06 pm

Working in Africa, is not straight forward or easy…and I have plenty of experience of late on that continent!

Nigerian backers had to pay the Virgin group, a huge license fee, which cut deeply into their cashflow! When the lisence was up for renewal, along with a change in government (individuals) The stage was set to kick Branson out. They parted ways, with a huge payout thrust at Branson, and V Nigeria comes to a close.

Nigeria is a filthy African nation, when compared to others; when you look at their human rights, living conditions, business practices etc. I always felt that V Nigeria sullied the Virgin Brand!… There are many other African countries, more fitting to carry the V!

But of course. Nigeria has ALOT of business travel due to oil!

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David

Jun 12, 2009 at 7:27 pm

But how will I get to Nigeria to pick up the inheritance money that was left to me by my uncle’s brother’s college-roommate’s nephew who died recently? I’ve already sent my $10,000 cash advance to the broker in Nigeria …

Darn.

;-)

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David

Jun 12, 2009 at 10:16 pm

Without ‘Virgin’ the name becomes just ‘Nigeria’.
Welcome back, Nigeria Airlines. What a beacon of fine practices you were the last time you were around.
And great business decisions, like dumping the Virgin brand? That’ll help you go the same way you went before!

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Len Hobbs

Jun 13, 2009 at 6:22 am

I watched, from Accra, Ghana, as the ‘Virgin’ effort was put together.

They made the same mistake that all African carriers, and most of the world’s carriers, make; two huge errors which cost them the airline.

One; in every case they selected the wrong airplane to fly to the cities served…the ‘cost’ of the airplane was never covered by the ‘price’ of the ticket…

Secondly; Africans haven’t connected the dots which balances ‘business people’ with ‘airline & maintenance guys’. SAA is the only operation on the continent which has figured out that a bunch of accountants cannot run an airline…somebody has to do the work to keep the company operating. The ‘airline guys’ cannot do it alone either…somebody has to do the books…pay the bills, write the payroll checks…and pay the ‘vig’ to the thieving Nigerian government…

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1. Raymond Archer
  
  May 12, 2010 at 9:34 pm
  
  I am trying to reach Len Hobbs, can anyone help me with his contact. My email address is archer2gh@yahoo.com.
  
  Reply
  1. Nick Holt
    
    Jun 15, 2011 at 4:36 pm
    
    You are not the only one trying to reach Mr. Hobbs. He seems to be avoiding responding to my repeated requests.
    
    Reply
Jay

Jun 13, 2009 at 12:55 pm

A great article here! – Branson is not the nice guy he claims to be! ..He cries over BA/AA .. but has sought from before to take over BMI and create a powerhouse at LHR! Not that BA are nice guys either…lol

Irrepressible British businessman, Richard Branson’s $25 million investment in Virgin Nigeria Airways in 2005, translating to 49 per cent of the equity in the Nigerian airline appears to have been self serving, THISDAY investigations reveal.
Documents sourced from the troubled Nigerian airline allege that the British billionaire, using his Virgin Atlantic Airline, was simply out to milk VNA for all he could from the minute the airline was set up in March 2005.
An official source confirmed that immediately the entire equity for VNA was paid by Virgin Airways Limited and the Nigerian shareholders that jointly own 51 per cent of the airline, Branson swiftly withdrew the bulk of his $25 million investment.
“The money was meant for leasing aircraft for VNA, provision of technical services and paying for the use of the Virgin brand,” the source said.
Available documents further revealed that VAL purportedly provided the Nigerian airline older uncompetitive aircraft, “so that VNA would not be able to compete on the lucrative London-Lagos/Johannes-burg routes with VAL.
It was alleged that the game plan was to knock off VNA from these lucrative routes. Sources claimed that the aircraft leased to VNA were not good for long haul operations in any shape or form.
“Due to their age, they were fuel guzzlers; their in-flight entertainment offering, especially in the premium cabins (Upper/ Business Class section of the aircraft) could not compete with that offered by VAL; and the Nigerian airline spent huge amounts of money leasing offices at London Gatwick Airport and Johannesburg where it had operations.
“All these were a major drain on its meagre resources,” volunteered the official.
Sometime last year, one of VNA’s managers wrote to its board of directors saying: “VNA is in need of cheaper and modern luxury long haul aircraft.
“But this was always stopped by Virgin Atlantic as it was afraid this would be too much competition for its own lucrative London-Lagos/Johannesburg routes.
“Therefore, VNA was stuck with old second-hand, fuel inefficient aircraft. VNA was doomed never to be a success from the start.
“VAL took its equity money back through very high management, branding and leasing fees. VNA had only $25 million left as starting capital financed by Nigerians.”
Added to this are allegations that VAL had no experience in short haul traffic, yet it advised VNA from the beginning on the wrong mix of aircraft.
The Virgin brand was another avenue supposedly used by Branson to milk VNA dry, as the Nigerian airline was made to pay millions of dollars for using the brand, “without proper negotiation.”
By April last year, VAL was claiming VNA owed it almost $11 million as unpaid royalties for use of the Virgin brand and was threatening to withdraw it.
As at yesterday, VNA was still battling with the possibility of the loss of the Virgin brand for non-payment of royalties that it can ill afford. In fact, VNA has received many threats in this regard.
VAL Trademark Five Limited of United Kingdom – the firm that manages the brand – has been threatening to stop VNA from continuing with the Virgin brand since March 3, 2008.
One of such letters dated October 6, 2008 ordered VNA to stop using the Virgin name and trade mark on or before October 17, 2008.
Though, sources said Branson agreed late last year to extend the trade mark license for a while, to enable VNA sort out its problems, “he has suddenly started threatening the Nigerian airline again.”
VAL’s decision to sell its equity in VNA at some point in late 2007 threw VNA into further crisis.
Instead of taking the private placement route, VAL offered 8,400,000 Class A shares, representing 42 per cent of VAL’s equity in VNA, to UBA for $85 million without the knowledge of other (Nigerian) shareholders.
When this was discovered, the other shareholders raised objections and several court injunctions were instituted.
The amount was later revised downwards to $34.5 million after protracted negotiations and wrangling among the shareholders.
However, UBA which was supposed to have jointly acquired VAL’s shares with Afrinvest, a Lagos-based investment firm, as joint underwriters failed to pay for the shares on September 30, 2008, the deadline agreed to by the parties to the deal.
Sources said Branson’s decision to divest from VNA was borne out of the pressure it was under from Singapore Airlines, VAL’s equity partner, to divest from loss making ventures and consolidate the business as a result of adverse operating conditions in the aviation industry worldwide.
THISDAY learnt that Branson’s claims in mid-2008 that he was pulling out from VNA due to the federal government’s highhandedness when it forcefully evicted VNA from Murtala Muhammad International Airport was believed to have been a smokescreen for the real reason VAL wanted to divest.

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Poor Hapless, Helpless Nigerian

Aug 30, 2009 at 8:08 pm

“The end of this relationship just shows how hard it can be to do business in Africa.”

Strong assertion; blind assertion. The license was up for renewal, both parties decided to part ways. Seems simple enough to me. But wait…what is a piece about Nigeria, nay, Africa without a healthy dose of knee jerk bile and invective?

Poor dumb jay visits some African countries feels he’s earned the right to speak on all. In condemning “Nigeria” you condemn the government (who is rightly criticized) along with the people who are victims of the human rights allegation you tossed out. Needless to say this never sits well with the people.

David – fair one. Nigerian’s deserve it. Although i should point out its a bunch of teenage school dropouts sending these letters but whatever. I just wish educated middle class Americans would stop being so gullible…or greedy.

David II – “Welcome back, Nigeria Airlines. What a beacon of fine practices you were the last time you were around.”

Thankfully, we dumb Nigerians have confidence in our ability to learn, improve and progress, the same basic human trait the U.S. also uses to tackle and address its problems. not surprising though, that you feel this somehow escapes us dumb Nigerians.

Len – “Africans haven’t connected the dots which balances ‘business people’ with ‘airline & maintenance guys’”

Do tell, what are these elusive connections and dots that confound us oblivious “Africans”? Serious question. Here are some dots: terrible history bequeathed strategically placed, well armed strongmen, strongmen bequeathed treacherous governments to rule roughshod over unarmed populace, roughshod rule bequeathed corruption, corruption bequeathed lack of funding, lack of funding bequeathed lack of expertise, lack of expertise bequeathed lack of aviation traning and such. Yippee. Get ur head out of your backside.

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