Nigerian flag carrier Virgin Nigeria said on Saturday it was suspending its loss-making long haul flights to Britain and South Africa in order to focus on its domestic and regional operations within West Africa.
Industry sources said one of the airline’s main financial backers, United Bank for Africa (UBA) (UBA.LG), had been pushing for it to restructure and reduce losses on the competitive Lagos-London and Lagos-Johannesburg routes.
“The decision to suspend both services is to enable us to review our entire long haul operations,” the company said in a statement.
“In the mean time, our focus is on consolidating and continuing to expand our profitable domestic and regional flight operations,” it said.
The suspension will take effect from Jan. 27 and passengers booked on flights after that date would be transferred to other carriers.
Virgin Nigeria, in which British billionaire Richard Branson’s Virgin Atlantic [VA.UL] has a 49 percent stake, was launched to great fanfare in 2005, bringing a credible national carrier to a country with an appalling air safety record.
Its routes to destinations within Africa’s most populous nation and to neighbouring countries in West Africa remain profitable, and it has purchased several new Embraer (EMBR3.SA) aircraft to expand those services.
But it has struggled on the highly competitive London-Lagos route, using smaller aircraft than well-established rivals British Airways (BAY.L) and Virgin Atlantic, and more recently facing competition from newcomer Arik Air’s brand new fleet.
Industry experts expect growth in business travel, which accounts for a significant proportion of passengers on routes to and from Nigeria, to slow down significantly this year as the global economic downturn forces companies to tighten budgets.
Virgin Atlantic, which said last year it was in talks to divest some of its holding in the Nigerian carrier, said it was watching developments closely.
“We support Virgin Nigeria’s decision to focus on its profitable domestic and regional operations and believe it can be even more successful as a result,” Virgin Atlantic’s communications director Paul Charles said.
“We remain in talks with interested parties about the divestment of a 42 percent stake,” he said.