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Virgin set to sever ties with Nigerian venture

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Virgin set to sever ties with Nigerian venture

By Matthew Green in Lagos

Published: August 20 2008 03:00 | Last updated: August 20 2008 03:00

Virgin Atlantic is in talks to sell its 49 per cent stake in Virgin Nigeria, the lossmaking West African carrier it set up in 2005, following an increasingly acrimonious dispute with the government over the location of its domestic operations.

Sir Richard Branson, president of Virgin Atlantic, has accused the authorities of using “Mafioso-style” tactics to force Virgin Nigeria to move its domestic services from their base at the international terminal in Lagos, the commercial capital.

“It is regrettable that events have caused us to review our shareholding and whether it is appropriate that the Virgin brand should remain linked to Virgin Nigeria,” Mr Branson said in a statement yesterday.

Virgin Nigeria was hailed as a symbol of growing investor confidence in Nigeria when it was set up by Virgin Atlantic and Nigerian institutional investors, in part to meet demand for a reliable carrier given the country’s poor record for air safety.

Virgin Atlantic claims the government reneged on a deal signed under Olusegun Obasanjo, the previous president, allowing it to use the international terminal for all its services. The administration of President Umaru Yar’Adua, which took power in May last year, says Virgin Nigeria’s claim is not legally valid.

Virgin Atlantic’s criticism echoes accusations made by other companies, including Royal Dutch Shell, which also accuse the new government of tearing up contracts signed under the previous administration. Mr Yar’Adua’s officials say his administration is only reversing deals in which foreign companies tried to exploit the country and that it is committed to promoting investment.

Sir Richard has claimed thugs were sent to smash up Virgin Nigeria’s domestic lounge earlier this year to force the company to move. “The behaviour of the authorities was similar to the way the Mafioso behaved in the US in the 1930s and not what I would have expected from the authorities in Nigeria,” he said in a statement last week.

Aviation authorities forced Virgin Nigeria to relocate its domestic flights from the Murtala Muhammed International Airport in the past week. The airline says a court appeal against the decision is pending. Virgin Atlantic said it had been in talks with potential purchasers for its stake in the carrier for several weeks.

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