Government will by the end of the year stop supporting the operations of Ghana International Airlines Limited (GIA). The airline, which has been a loss making business entity since inception, has been on a $1.5million monthly subsidy from government. It has only been able to survive because of government funding, which it has augmented with some commercial loans.
Confirming government�s decision, Minister for Information, Zita Okaikoi, told the Times newspaper that �Cabinet after careful consideration of the report of the Transaction Advisers, Fidelity Bank, however decided to give the management of GIA adequate notice of its intention to withdraw the subsidies.
According to the Minister, Cabinet has also decided that the Ministry of Transport should develop a national aviation policy that will strongly emphasize the involvement of Ghanaians as part owners of future airlines that operates as Ghanaian companies. Mr Okaikoi said government has since November 2005, just a month after GIA started operations, pumped over $56 million to keep the airlines operational.
GIA was incorporated as a national airline following a Joint Venture in November 2004 with government as a seventy (70 per cent) shareholder and an American consortium, GIA-USA LLC with thirty (30 per cent) shares. While government paid fully for its share, amounting to $4.9 million, available records show that the minority shareholder is yet to pay in full its contribution of $2.1 million.
GIA-USA LLC which had previously claimed that it paid the $2.1million into an account in New York later informed the former Chief of Staff, Kwadwo Mpiani in a letter dated July 11, withdrawn to pay off the partner, Sentry Investments LLC.
This letter and its contents has been one of the major causes of dispute between the two joint venture partners, development which later led to a forceful takeover of the airline by the majority shareholder in April 2006, less than a year after GIA commenced operations. According to some industry experts, the company�s problem started right from the commencement of business. Despite the inability of the airline�s management to raise the required $55 million as start-up capital before commencement, they proceeded to start operations in October 2005.
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