EgyptAir has been chosen as the preferred strategic partner in the establishment of a new viable home-based carrier, AviationGhana can exclusively reveal.
The Cairo-based airline’s proposal, after careful scrutiny by the committee of aviation experts constituted by the Aviation Ministry, was ‘much better’ than what was proposed by Africa’s biggest airline, Ethiopian Airlines.
A Memorandum of Understanding (MoU) between the two parties is to be signed with the shareholders agreement expected to be finalised in the coming days.
The agreement is also expected to be submitted to Parliament for approval in the coming weeks.
Cairo-based EgyptAir currently operate scheduled passenger and freight services to more than 75 destinations in the Middle East, Europe, Africa, Asia, and the Americas.
Despite the impact of the COVID-19 pandemic on the aviation sector, the government plans to facilitate the setting up of a new home-based carrier.
In an initial Memorandum of Understanding signed with Ethiopian Airlines (ET) last year to be the strategic partner, government said ET can hold up to a 49 percent stake. Of the majority 51 percent stake, 10 percent is to be owned by the state and 41 percent offered to individuals and institutional investors.
However, the choice of Ethiopian Airlines as the strategic partner was held back due to a lack of agreement over key issues such as routes and tenure of the management contract.
Why investor interest in the midst of a crisis
The COVID-19 pandemic has led to a sharp decline in the prices of airline stocks across the world. Major airlines saw their stocks plummet, with pre-COVID-19 strong carriers needing government support to survive. Despite this grim outlook, the Africa region remains one of the areas with huge potential for aviation, given the current poor air connectivity in the region.
Ghana’s desire to establish a new flag carrier is born out of the desire to leverage the facilitating role of aviation for one of the fastest-growing economies in the world pre-COVID-19.
The country seeks to become the aviation hub of the sub-region, and this is seen as a key part of that project. With an estimated population of 350 million, most of whom are under 30 years, the sub-region is fertile for aviation growth post-COVID-19.
Aviation is an enabler and the aviation economy employs millions of people and generates billions in revenue. For a nation seeking to create jobs for hundreds of unemployed tertiary-educated graduates, building a strong aviation sector is imperative. National pride and recapturing the old routes plied by the defunct Ghana Airways are also some of the key motivations.