NIGERIA SIGNS VIRGIN AIRLINES DEAL; AVIATION

UNCLAS SECTION 01 OF 02 LAGOS 002025

SIPDIS

DOT FOR FAA AND TSA; BRUSSELS, DAKAR FOR FAA

E.O. 12958: N/A
TAGS: EAIR ELAB EINV NI PGOV
SUBJECT: NIGERIA SIGNS VIRGIN AIRLINES DEAL; AVIATION
UNION VOWS TO PREVENT AIRCRAFT FROM FLYING ABSENT
PAYMENT OF BACK WAGES

Reftel: Lagos 1905


1. Summary. The Government of Nigeria signed
September 28 a partnership deal between Nigeria Airways
(NA) and Virgin Atlantic Airways (reftel),creating
Virgin Nigeria. The new carrier anticipates beginning
operations early 2005. The Federal High Court ordered
liquidation of NA assets July 9. NA employees have
been demonstrating outside the domestic terminal of
Murtala Muhammed International Airport (MMIA) for the
past several days demanding payment of back
wages/pensions and that the new carrier retain some
existing employees. The Aviation Unions Grand Alliance
(AUGA) has vowed to prevent the new carrier from flying
pending resolution of these issues. Airport operations
are not impacted by the current NA demonstration. End
summary.

Hurried Virgin Nigeria Signing Ceremony


2. (U) GON officials and Virgin Group president Richard
Branson signed the Virgin Nigeria partnership September

28. It was initially planned that President Obasanjo
and Branson would ink the deal during a televised news
conference on Nigeria's October 1 Independence day.
The public's lukewarm reception to the Virgin deal and
on-going protest by NA employees may have played a role
in the government's more understated publicity relating
to the deal.

Police Lock Out Nigeria Airways Employees


3. (U) Disgruntled NA employees have been rallying at
company headquarters outside the domestic terminal of
Murtala Muhammed International Airport since Monday,
September 27. The employees are demanding payment of
back salaries and pensions.


4. (U) The Nigerian police quietly took up watch at the
NA headquarters Sunday September 26. Though NA is
operationally defunct, according to Assistant General
Manager for Public Affairs, Obi Aseme, many of its
employees are still reporting to work. When employees
arrived on September 27 to report for duty, police
blocked their entry. The court-appointed liquidator of
NA assets, Babington Ashaye, reportedly asked for
government assistance in assuring the take over of the
property after NA employees foiled several previous
attempts. The group of employees quickly transformed
into an emotionally charged demonstration as the NA
employees worried the shut out signaled that their
unpaid wages and pensions would never be recouped.
While the lock-out has been mostly peaceful, on
September 30 police discharged tear gas in an
unsuccessful attempt to disperse the crowd.

Umbrella Aviation Union Vows To Ground New Carrier If
Labor Demands Are Not Met


5. (U) Aviation Unions Grand Alliance (AUGA)
representatives vowed to prevent the new Virgin Nigeria
carrier from operating, pending satisfactory resolution
of NA employees compensatory claims. AUGA
representatives told Consulate Lagos approximately 1600
former NA employees and 2300 pensioners have not been
paid in 18 months and 26 months respectively. The
representatives fear the Virgin Nigeria deal will not
only ensure that NA employees and pensioners are never
paid back payments, but also result in layoffs of large
numbers of NA employees. AUGA sees the Virgin Nigeria
deal as a bad solution. They expect the new carrier
will repatriate most profits to the UK and that it will
hire few Nigerian employees. (Note: AUGA is the
umbrella labor organization of the National Association
of Aircraft Pilots and Engineers (NAAPE),Air Transport
Services Senior Staff Association of Nigeria (ATSSSAN),
and National Union of Air Transport Employees (NUATE)
End Note).

Security at Murtala Muhammed International Airport Not
Compromised


7. (U) The NA demonstration is contained in an area
outside of airport property near the MMIA domestic
terminal. Reports of police presence range from 200-
300 armed mobile police officers. Tensions are
reportedly high at the demonstration site. According
to Federal Aviation Authority of Nigeria contacts, the
tear gas used September 30 affected a large area around
the domestic terminal. However, there are no reported
disturbances of airport use, local vehicular traffic,
or flights.


8. (U) Comment: The outstanding labor issue casts a
shadow over the Virgin Nigeria deal and could possibly
affect the schedule to begin operations early 2005.
Thus far the new partnership team has not stated its
position on whether it is prepared to settle back
payments owed to NA employees and pensioners. Over the
longer term, Virgin Nigeria's possible lack of access
to the Nigeria-U.S. transatlantic route could be a much
larger obstacle. End comment.

Browne