Cablegate: Saa Named Nigerian Eagle's Technical Partner
UNCLAS LAGOS 000125
STATE PASS DOT FOR KEVIN SAMPLE
E.O. 12958: N/A
TAGS: EAIR ECON NI
SUBJECT: SAA NAMED NIGERIAN EAGLE'S TECHNICAL PARTNER
REF: 03 LAGOS 2153
1. (U) Summary: On Wednesday, January 14, GON officials
announced the selection of South African Airways (SAA)
as Nigerian Eagle Airlines' technical partner.
Executives close to the deal expect the new airline to
replace Nigeria's ailing national carrier, Nigeria
Airways Limited, later this year. End summary.
2. (U) Competition for the position of technical
partner was far from fierce: SAA was the only
established international airline to answer the GON's
November 17 call for expressions of interest in
Nigeria's new flag carrier. Even so, the airline's
proposal was subject to a thorough evaluation.
Executives at Financial Derivatives Company (FDC)
Limited, the Lagos-based economic think tank acting as
the project's financial advisors, compared SAA's
operations to those of Lufthansa and report being
"impressed" by SAA's technical and managerial capacity.
They say the airline is capable not only of operating
domestic and regional flights, but also of providing
long-haul point-to-point services to London, Dubai,
Saudi Arabia, and Johannesburg.
3. (U) As Nigerian Eagle Airlines' technical partner,
SAA will exercise management control and direct the
airline's day-to-day operations. SAA is expected to
purchase at least 30 percent of the carrier's $60
million total equity, although FDC executives say SAA
would like to control a slightly larger proportion.
The financing, they say, has not been fully agreed, but
they expect core investors to hold 40 percent of
Nigerian Eagle Airlines and intend to offer the
remaining 30 percent to individual shareholders in an
initial public offering slated for late 2004 or early
2005 (or shortly after the new carrier posts two
consecutive quarters of earnings). Nigerian Eagle
Airlines will be wholly privately owned, but as
Nigeria's designated flag carrier, it will acquire
landing rights at major airports and gain access to the
routes available under the GON's existing bilateral air
4. (U) Comment: Having found a reliable technical
partner, one of the only things Nigeria's new flag
carrier lacks is a group of core investors. Finding
them is FDC's next step. Nigerian Eagle Airlines seems
to have gotten off to a good start. If it gets off the
ground later this year, Nigeria's aviation industry
should receive a substantial boost - and begin to
repair a reputation badly damaged by Nigeria Airways'
failures. End comment.