Other agreements with air carriers

technical advisors hired by the Ministry of Aviation. The resulting shareholder, brand and technical services agreements give the technical partner the ability to recommend certain key officers to the Board and to audit the airline to ensure its safety. This is necessary because some required skills are not currently available in Nigeria. High quality non-Nigerians have been recommended and hired for the positions of Chief Executive Officer, Chief Operations Officer, and Chief Financial Officer. This will help facilitate safe aviation practices. The non-Nigerians are explicitly required to seek a Nigerian to replace them as part of succession planning and the Human Resources Department will hold each of them accountable for this as part of their annual performance review process. The 51:49 equity structure was designed to ensure that the technical partner has a financial stake in the resulting flag carrier and will remain committed to ensure that the highest level of technical expertise and safety is provided to Virgin Nigeria.

16. Financial resources/Capitalization. The company received initial capitalization of $50 million from its shareholder group, in proportion to their share interests. (For a breakdown of precise share interests, see the chart set forth in paragraph 5.) The 51% Nigerian shareholding was secured via a private placement to Institutional Investors which was undertaken by Investment Banking & Trust Company Limited (IBTC), Nigeria’s premier investment bank. Criteria were specified by the issuing house, IBTC to ensure the highest quality of Nigerian investors.

The private placement was limited only to Nigerian registered institutions that had been in existence for at least three years before January 1, 2004, and that had a minimum total net financial assets of N=350 million ($1.5 million) and that did not have any material interest in any airline registered in Nigeria by the NCAA as a Nigerian carrier and operating with Nigeria as its home base. Investors were also required to provide corporate documents, tax clearance certificates and a statement of their debt profile. The process was completed on schedule, and the private placement was substantially subscribed.

The Nigerian shareholders as a group, have a Shareholders Representative, Chief S. Adegbite, who coordinates shareholder activities and also serves as Chairman of Wema Bank, Oasis Insurance and other Nigerian companies. It is intended that Nigerian share ownership in Virgin Nigeria will be widened to more Nigerian investors as soon as feasible through an initial public offering and listing on The Nigerian Stock Exchange.

17. Financial results. Virgin Nigeria is a start-up carrier which had no commercial operations at the time of the 2004/5 year end and accounts. The profit and loss summary for the period between January 7, 2004 and February 28, 2005 are Exhibit VNA-008.

18. State support. As a privately owned carrier, the Government of Nigeria has no ownership stake in Virgin Nigeria, and does not provide direct financial support or subsidy to the carrier. As a new business and employer, Virgin Nigeria has received a short-term exemption from import duties, to ensure Virgin Nigeria is able to import equipment essential to ensure that the security, safety and operational quality of the airline continues to meet international standards. Virgin Nigeria also receives tax credits for staff training expenses. This tax incentive was created to encourage employers to develop the skills of their Nigerian workers. Similar tax credits are available to other private employers in Nigeria.

19. Traffic forecasts. An estimate of the total traffic and the financial results of the proposed services for the first two years of operations on the initial Lagos to New York route can be found in Exhibit VNA-009.

20. Designation. Virgin Nigeria has been formally designated by the Federal Government of Nigeria in accordance with the Air Transport Agreement between The Government of The United States Of America and The Government of The Federal Republic of Nigeria. See VNA-010.

21. Bilateral Agreement. Nigeria and the U.S. have concluded an Open Skies bilateral air service agreement. This agreement has been subject to a phase-in process, with the last of the phase-in limitations scheduled to expire on March 31, 2006. Thus, there is a firm bilateral basis for the grant of the authority requested herein. Virgin Nigeria has been assured by the Government of Nigeria that it would be open to air service by any properly authorized U.S. air carrier, a view which has been expressed by Nigerian Government officials on visits to the United States Department of Transportation.

22. Safety or tariff violations, accidents. Virgin Nigeria has not been involved in any safety or tariff violations or any accidents since the commencement of operations.

23. Warsaw Liability Waiver. The original and 3 copies of OST Form 4523 will be filed directly with the Department of Transportation.

24. Fuel consumption. The introduction of the services proposed by Virgin Nigeria will involve a near-term net annual change in aircraft fuel consumption exceeding 10 million gallons, constituting a “major regulatory action” under the Energy Policy and Conservation Act, as implemented by 14 CFR Part 313. According to Virgin Nigeria estimates, the annual fuel burn for its proposed Lagos – New York/Newark roundtrip will be 17.6 million gallons. Virgin Nigeria does not anticipate encountering any difficulty in obtaining adequate supplies of fuel for its proposed services from existing sources. Moreover, Virgin Nigeria believes that the public benefits of convenient new nonstop service between Nigeria and the United States warrant and offset any increased fuel consumption that, by necessity, will accompany the introduction of this new air service.

25. Aviation Disaster Assistance/Passenger Manifest Rules. Virgin Nigeria has adopted a plan to comply with the Aviation Disaster Family Assistance Act. A copy of that plan will be filed with the Department and National Transportation Safety Board. Pursuant to 14 CFR Part 243, Virgin Nigeria also will file its Passenger Manifest Compliance Plan with the Department.