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Lawsuit could stall Virgin launch

Wet-lease specialist seeks injunction to stop new Nigerian airline as it bids to recover $10 million in unpaid fees

Icelandic wet-lease specialist Air Atlanta has started legal action to halt the launch of Nigerian national carrier Virgin Nigeria until it recovers $10.6 million it claims it is owed by the start-up's liquidated predecessor, Nigeria Airways.

Lawyers working for Air Atlanta are seeking an injunction restraining the Nigerian government from launching the new carrier until it settles unpaid lease fees on several Boeing 747s and 767s.

The debt was incurred over the four-month period up to Nigeria Airways' January 2003 decision to cease operations.

"The litigation centres on the fact that the Nigerian government, a 51% shareholder in the new airline, is currently transferring assets and traffic rights from Nigeria Airways to Virgin Nigeria," says Air Atlanta sales and marketing vice-president David Mason.

"We feel there is an obvious link between the government and the new entity. We do not seek to prevent the new carrier from using those assets, but as the largest creditor of Nigeria Airways, we are seeking a proper distribution of those assets among the creditors."

Mason says the Nigerian government is responsible for Nigeria Airways' financial problems. This view is shared by the International Transport Workers Federation (ITF), a London-based group that represents the Air Transport Services Senior Staff Association of Nigeria, the National Association of Aircraft Pilots and Engineers and the National Union of Air Transport Employees.

ITF general secretary David Cockroft says in a letter to Nigerian aviation minister Isa Yuguda and Virgin Group chairman Sir Richard Branson: "Virgin Nigeria is not simply a new company to begin operations, but has taken over major assets and the route network of the liquidated Nigeria Airways. Virgin Nigeria should be considered the successor company, and is thus responsible for achieving a satisfactory solution, if not legally then at least morally."

Cockroft also says the Nigerian government should settle outstanding staff issues from Nigeria Airways, including non-payment of gratuities and pension arrears. He urges Virgin Nigeria and the Nigerian government to re-employ former Nigeria Airways staff.

Despite the lawsuit and union demands, Virgin Nigeria chief executive Simon Harford is confident the new carrier will be launched on schedule at the end of the second quarter with a leased A320. "Virgin Nigeria is on track to launch shortly," he says.


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