Jimoh Ibrahim: Can He Rejig The Virgin Nigeria Brand?

Richard Branson, the chairman of the London based Virgin Group has a disdain for conventional business wisdom. This disdain made it possible for him to build the group from almost nothing to a more than $3.5billion international conglomerate and one of the world’s most powerful and recognizable brand. Under the ubiquitous Virgin brand, Branson ventured into panoply of businesses- from condoms to wedding gowns, from airlines to financial services- and in the process has taken on entrenched giants and wrested market share from them.

This unique business personality loves nothing more than a daunting challenge; he views the impossible as just another business opportunity. Through his astuteness, he took the decaying British rail and turned it into a profitable business. And throughout his career, he has cleverly taken the David role by taking on Goliaths like British Airways, EMI music and Coca-Cola with the intent of becoming the best.

Branson’s trademark is outlandish publicity stunts. He will do anything to promote the Virgin brand like driving a tank down Fifth Avenue in New York to introduce Virgin Cola to Americans. While undertaking this and other stunts, he says his highest paid and most important employee is Will Whitehorn, his public relations and communication director. “I suspect in most companies, the public relations person is down at NO.20 in the pecking order” he was quoted as saying “But here, he is fighting incredibly important battles. If a negative story starts running away with itself in the press and is not dealt with fast, it can badly damage the brand. And so we put enormous weight on our public relations people.” He sets about 25 percent of his time for public relations activities.

On September 28, 2004, the Nigerian government and Virgin Atlantic Airways signed an agreement to establish a new airline for Nigeria, to be called Virgin Nigeria Airways. Nigerian institutional investors own 51% of the company and Virgin Atlantic Airways owns 49%. The airline’s inaugural flight was on 28 June 2005 from Lagos to London Heathrow using an Airbus A-340-300 aircraft. Virgin Nigeria went on to become one of Nigeria’s largest airlines carrying its 1,000,000th passenger and 4,000th ton of freight within two years of operation. The airline also received accolades including THISDAY Awards 2006 Airline of the year and a nomination for 2006 African Airline of the year by ASATA (Association of South African Travel Agents).

It was therefore not difficult to see why the Obasanjo regime picked Branson to help create a semblance of a national carrier following the liquidation of the erstwhile national behemoth, the Nigeria Airways. This was what led to the emergence of the Virgin Nigeria Airways. This arrangement was criticised by most Nigerian brand management experts and as one of them put it “There is nothing Nigerian about this Virgin.”

He stressed that this was clearly evident from the onset when Branson transferred the bulk of the $25 million equity he contributed toward the venture back to the UK to cover the cost of aircraft leasing and ‘branding.’ The reason for this according to him was business expediency, the new carrier would be in competition with Branson’s Virgin Atlantic Airways and could jeopardise his lucrative London-Lagos/Johannesburg routes. Therefore, older second hand aircrafts were leased to Virgin Nigeria – thereby ensuring it was ‘practically dead on arrival.’

It would be recalled that the federal government set a deadline of April 30, 2007 for all airlines operating in the country to re-capitalise or be grounded, in an effort to ensure better services and safety. The airline satisfied the Nigerian Civil Aviation Authority (NCAA)’s criteria in terms of re-capitalization and was re-registered for operation.

However on August 19, 2008, Virgin Atlantic announced that it was “in talks to sell its 49 percent stake in Virgin Nigeria”. It is also reviewing “whether it is appropriate that the Virgin brand should remain linked to Virgin Nigeria”. The dispute arose after Virgin Nigeria’s domestic operations were moved against its will by the Ministry of Aviation to MMA2. Virgin Nigeria had twice refused the directive to relocate its domestic operations from the international terminal citing the Memorandum of Mutual Understanding it signed with the previous Obasanjo administration and pending appeal in a Lagos High court as reasons for not complying.

As a result of this, Virgin Nigeria announced on September 17, 2009 that it has rebranded as Nigerian Eagle Airlines. Nigerian Eagle Airlines also stated that they plan to focus on domestic and regional flights with further expansion into Europe and eventually the USA.

A few months down the line, it was reported that the Airline was heavily indebted to United Bank for Africa (UBA) to the tune of over $200 million in loans and guarantees that has been extended to the Airline by the bank. Guaranty Trust Bank was also said to have extended $15 million credit facility to the airline. It was therefore no longer news that the airline is in dire strait and would need an urgent injection of funds and a bail out plan. A number of investors that expressed intentions in bailing the airline out were invited and at the end a deal was struck with NICON Group owned by Jimoh Ibrahim. The deal, a company source disclosed was worth $5 million, plus $1.00 being the nominal value of Virgin Atlantic shares in Virgin Nigeria which is about 97 percent of the airline.

Analysts believe that the huge indebtedness of the company to UBA was because the bank refused to operate an open syndicated financial arrangement that would have spread the risk among other banks like was done with MMA2.

But, the big question remains: will Jimoh Ibrahim be able to turn the airline around? Opinions are divided here. A close company source who spoke to BrandIntelligence on conditions of anonymity said he has his doubt. “Barely 24 hours after a deal was struck between Nigeria Eagle and NICON our Managing Director, Captain Dapo Olumide resigned for no justifiable reason. All along, we had the impression he was in support of the bail out plan and showed nothing to the contrary. The question has remained hanging in the air; why did he resign in a dramatic fashion? Are there things he knew that we are not aware of? If we can’t find answers to these questions then we may be walking into a quick sand situation.”

Another company source who has close to 20 years experience in the aviation industry said Ibrahim’s track records gives workers in the company cause for concern. “If you will recollect, Jimoh Ibrahim bought EAS airlines and transformed it into NICON Airways, what happened to that airline and its workers? We all know that the wings of the airline were clipped, so should we be happy that he has bought into our company? No. You remember he also bought the National Mirror newspapers from Emeka Obasi, the founder and publisher, and hopes rose that he would resuscitate the paper. In fact, the workers were given the impression that the paper will come out with a bang. However, after a few editions, the paper went in and is yet to come out again. The impression, passed on to the workers, still remains that modern printing and colour separation machines have been bought for the new look Nation Mirror, but as we speak you know that the paper is not on the news-stand. We are still waiting.

But, the man at the centre of the storm – who is like Branson in some ways because of his unconventional methods too – said that, there is no cause for alarm. Speaking at a press briefing after the deal, Ibrahim dismissed the fears of the staff and other allegations. According to him, NICON Airways had problems because he was not the only shareholder and certain decisions had to be taken that involves all shareholders. “We disagreed over the management of NICON Airways over whether to lease or buy aircraft. I have 16 companies and over 18,000 workers and they are all doing well. Most of the companies were almost dead when I bought them. I turned them around and made them a success. If I had not been professional they won’t be a success…You will see a new airline soon.”

An industry source who worked in an Ikeja based agency that managed the account of the airline from inception said “From a brand equity perspective, what the airline has witnessed is most unfortunate to say the least, particularly if one considers the enormity of the efforts and resources that had been invested in building the brand and endearing it to its publics. Though a number of varying factors precipitated the onset of these negative developments, the chief of these I will attribute to insincerity on the part of government and key stakeholders of the airline. It also raises the pertinent question of how foreign investors perceive the Nigerian market from an investment perspective. It’s a very critical period in the existence of the airline, and I think a fresh injection of funds is one of the best things that can happen to it at this point in time, regardless of where it’s coming from.”

Tunji Gbadegesin a Lagos based brand management consultant said the question is not whether Ibrahim will be able to turn the airline around, but the critical question to ask is – what is the condition of brands within the industry in question? “The entire aviation industry in Nigeria is in crisis. Note that this is not peculiar to the country alone but it is a global phenomenon compounded by the global economic meltdown. Airlines are burdened with low working capital, dwindling patronage, poor financial structure and a host of other problems.”

He stressed that the arrangement between the government and Virgin Atlantic was flawed from the onset from a brand perspective. “The Virgin brand is an acknowledged global brand that has its hands in a lot of pies, commonsense ought to have shown that the Virgin brand would swallow Brand Nigeria internationally given the fact that brand Nigeria have a lot of brand eroders; 419 etc. The red virgin logo in the rear of the planes dwarfs the Nigeria in the body of the planes. The arrangement favoured Virgin more than it does Nigeria.”

Another brand consultant, Theodore Oparadike said, if all technical and financial details are fine tuned and put in place, the airline need to assume a new name that should serve as a vehicle to positively portray brand Nigeria. “I see no reason why poorer countries like Ethiopia and Kenya can own airlines with visible impact in the country and a country like Nigeria cannot maintain a national carrier, it’s a shame! Your national carrier is another way of showcasing the uniqueness of your brand. The Ethiopian is another way of telling people that there is a country called Ethiopia.”

Jimoh Ibrahim antecedents are one reason people are scared of him, according to Tosin Fakorede, a creative director. “Unlike Richard Branson, who gives public relation the utmost attention, Jimoh Ibrahim is still living in a world where he thinks money is everything, it is not, and the earlier he realises it, the better. What do we know about the so called 16 companies that he says he has, practically nothing. Can you compare Global Fleet to Oando? Of course not, the difference is as clear as day and night.”

Fakorede pointed out that, though Ibrahim may be doing some noble things but “nobody hears about them and what you don’t hear or read does not exist. He should go and study Branson and other business moguls, money is not everything, but perception is.”

Since he said he wants to rescue Virgin Nigeria in the “national interest” will Jimoh Ibrahim succeed where Richard Branson failed? Will his native intelligence outshine the publicity stunts of Branson? Are we going to see a new airline like he predicted? Will the airline change its brand name? For answers to these and many more questions – Time will tell.

SOURCE: The Guardian

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