Davies' Report Details The Mess At Ghana Airways
[Ghanaian Chronicle] 4/26/2004
Accra (Gh.) 26 April 2004 - The Roadmap to Recovery report for Ghana Airways, which was conducted by Brian Davies- the man credited in aviation circles as the one who turned Kenyan Airways from a highly indebted airline to a profit making one, in late 2003 but was boycotted by the Roads and Transport Ministry and the Ghanair Board, has revealed that the financial fortunes of the airline have deteriorated rapidly after the 2002 Price Water House (PWC) audit with losses averaging about $1.5m a month.
Ghana Airways, the report said, has lost money every year over the last 10 years, apart from 1997 and 1998.
Similarly, it has been revealed that the airline spent $13.5 million dollars to purchase a DC10 from Malaysia, but used the aircraft for only 3,745 hours because of disputes over final payments which eventually led to the confiscation of the aircraft by other creditors of the airline.
According to the report, the airline has been insolvent since 1999 but has continued operations in contravention of the Companies Code of Ghana. An insolvent company, according to experts, is a company which cannot pay its debt as they fall due in the usual course of business or a company whose liabilities are in excess of a reasonable market value of assets held.
The report further warned that the directors of the Ghana Airways could be held personally liable if by continuing to trade, while insolvent, the position of the creditors is worsened, adding that the Government of Ghana (GoG) had urged the airline to continue trading so that it could be held liable for any liabilities created after identifying that the company is insolvent.
According to the report, the only reason for the continued operation of Ghana Airways is for the airline to improve the prospects of creditors being paid, and 'therefore management should not be doing anything that makes the debt situation worse.'
The report also noted that there were no up-to-date financial statements that include balance sheets or cash flow information, a situation, it said, makes it impossible to provide an accurate assessment of the current financial condition of the airline.
According to the report, the only financial information, which came from the Finance Department, was an un-audited financial performance up to the end of the year 2002 and a management report showing financial performance for the first six months of 2003. The report lamented that even information on payables and receivables up to August 2003 was limited.
On the aspect of the airline's financial performance, the report noted that it was difficult to properly assess the financial performance of the airline at the operating level owing to lack of audited accounts and massive distortions caused by trading while insolvent.
Excess Baggage Story Confirmed
In another development, a passenger on board the Ghana Airways 1 March 2004 Flight GH0170, from Accra to Baltimore, which was reported to have 9.3 tonnes of excess baggage unaccounted for, amounting to a loss of $100,000, has confirmed the story.
The passenger, who was in the Business Class, said the overloading of the plane was no secret to everyone on board, as the passengers were informed that their delay in Banjul was as a result of the baggage 'flying all over the compartment' and that they were repacking them.
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