Multinational - Company Air - Afrique Reinforcement Project

AFRICAN DEVELOPMENT BANK
MULTINATIONAL
MULTINATIONAL COMPANY AIR-AFRIQUE
REINFORCEMENT PROJECT
PROJECT COMPLETION REPORT
COUNTRY DEPARTMENT
WEST REGION
OCDW
November
1999
TABLE OF CONTENTS
Pages
EQUIVALENTS, UNITS OF MEASURES, ACRONYMS
AND ABBREVIATIONS ...................................................................................................(i)
BASIC DATA ..............................................................................................................(ii)-(v)
EXECUTIVE SUMMARY ...............................................................................................(vi)
PROJECT MATRIX ........................................................................................................(vii)
1
2
3
INTRODUCTION..................................................................................................................1
PROJECT OBJECTIVES ......................................................................................................2
PROJECT FORMULATION AND DESCRIPTION ...........................................................2
Project Formulation ...............................................................................................................2
Project Description ................................................................................................................2
4
PROJECT IMPLEMENTATION .........................................................................................4
Effectiveness, Start-up and Implementation Schedule...........................................................4
Modifications..........................................................................................................................5
Impacts of Modifications on Project Objectives ..................................................................5
Procurement of Goods and Services ......................................................................................6
Reporting ................................................................................................................................6
Project Outputs ......................................................................................................................6
Costs, Financing and Disbursements .....................................................................................7
Performance of Suppliers and Contractors ............................................................................8
5
PROJECT PERFORMANCE.................................................................................................8
Institutional Performance ......................................................................................................8
Operational Performance .......................................................................................................9
Economic Performance ........................................................................................................10
Financial Performance .........................................................................................................11
6
SOCIAL AND ENVIRONMENTAL IMPACT ..................................................................13
Social Impact .......................................................................................................................13
Environmental Impact ..........................................................................................................13
7
PROJECT SUSTAINABILITY ..........................................................................................13
Sustainability Factors ..........................................................................................................14
Technical Sustainability ......................................................................................................14
Financial Sustainability .......................................................................................................14
8
PERFORMANCE OF THE BANK AND THE BORROWER ...........................................15
Bank Performance ...............................................................................................................15
Performance of the Borrower ..............................................................................................15
9
ASSESSMENT OF THE OVERALL PERFORMANCE OF THE PROJECT..................16
Achievement of Project Objectives ....................................................................................16
Project Costs ........................................................................................................................16
Duration of Project Implementation ...................................................................................16
Social and Environmental Impacts ......................................................................................16
Sustainability of the Project .................................................................................................17
Internal Rate of Return of the Project ..................................................................................17
Assessment of Project Overall Performance .......................................................................17
10
CONCLUSIONS, LESSONS AND RECOMMENDATIONS ...........................................17
Conclusions ..........................................................................................................................17
Lessons ................................................................................................................................18
Recommendations ................................................................................................................18
LIST OF ANNEXES
No. of pages
Annex 1
:
Air Afrique Organizational Chart
1
Annex 2
:
List of Shareholders of Air Afrique
1
Annex 3
:
Air Afrique Fleet
1
Annex 4
:
Status of Air Afrique's Debt
1
Annex 5
:
Project Cost and Financing
1
Annex 6
:
Disbursements Schedule by Source of Finance
1
Annex 7
:
Summary Table of Modifications
1
Annex 8
:
Summary Table of the Financial Trends
1
Annex 9
:Implementation Performance
1
Annex 10
:
Bank Performance
1
Annex 11
:
Development Impact
2
Annex 12
:
Matrix of recommendations and Follow-up Actions
1
Annex 13
:
Conditions Precedent to First Disbursement
1
This Project Completion Report was prepared by Mr. J.B. NGUEMA-OLLO, Electrical Engineer, OCDW.6 and a Consultant Civil Aviation
Engineer, following their mission in the project area in December 1998. Contributions were received from Mr. M. LEKE, Transport Economist,
OCDW.6 on the economic performance and from Mr. H. KAMOUN, Financial Analyst, OCDW.6 on Financial Performance. Further inquiries
should be addressed to :
Messrs. C.R. SPENCER
Ag. Director
OCDW
Ext. 4041
M.L.B. ASKOFARE
Ag. Division Manager
OCDW.6
Ext. 4683
J.B. NGUEMA-OLLO
Electrical Engineer,
OCDW.6
Ext. 5276
i
EQUIVALENTS, UNITS OF MEASUREMENT, ACRONYMS AND ABBREVIATIONS
*
Monetary Equivalents


Monetary Unit
1 UA
*
Measurement Unit








1 kilometer (km)
1 meter (m)
1 centimeter (cm) =
1 square kilometer (km2)
1 hectare (ha)
1 litre (l)
=
1 kilogram (kg)
1 ton (t)
*
Acronyms and Abbreviations






AC
ADB
AFRAA
ALPHA 3
AOC
ATAF
:
:
:
:
:
:




















ATLAS
CID
CMA
CMAB
DAC
FAA
GAETAN
IATA
ICAO
JAR 145
KSSU
PCB
PKT
PNT
SEN
SKO
SOC
SODETRAF
SOGERMA
UTA
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
:
At appraisal
CFAF
405.4120 CFAF
At the PCR date
CFAF
800.932 CFAF
=
0.62 mil
=
3.28 ft
0.394 inch
=
0.384 square miles
=
2.47 acres
0.264 gal
=
2.204 lbs
=
1000 kg
Afrique Centrale (Central Africa)
African Development Bank
African Airlines Association
Logiciel pour système informatisé de vente des billets
Afrique occidentale (West Africa)
Association des transporteurs aériens francophones (Association of
Francophone Airlines)
(Air France - IBERIA - LUFTHANSA - ALITALIA - SABENA)
Centre Industriel de Dakar (Dakar Industrial Centre)
Centre de Maintenance d’Abidjan (Abidjan Maintenance Centre)
Centre de Maintenance de Brazzaville (Brazzaville Maintenance Centre)
Civil Aviation Directorate
Federal Aviation Administration (USA)
Gestion automatique de l'enregistrement et du traitement des passagers
International Air Transport Association
International Civil Aviation Organization
Joint Aviation Requirement
(KLM - SWISSAIR - SAS - UTA)
Personnel commercial de bord
Passager au kilomètre transporté
Personnel navigant technique
Sénégal
Siège Kilomètre Offert
Coefficient d'occupation des sièges (Seat Occupancy Coefficient)
Société pour le développement du transport aérien en Afrique
Société girondine d'entretien et de réparation de matériel aéronautique
Union des transporteurs aériens
Fiscal year
1st January - 31 December
ii
AIR AFRIQUE
PROJECT FOR THE REINFORCEMENT
OF THE MULTINATIONAL COMPANY AIR AFRIQUE
A)
BASIC DATA
1)
2)
3)
4)
5)
Country
Project
Loan Number
Borrower
Guarantors
:
:
:
:
:
6)
7)
Beneficiary
Executing Agency
:
:
B)
PROJECT DATA
N°
Loan Amount in
UA
MULTINATIONAL
Reinforcement of the Multinational Co. Air Afrique
B/AIR AFRIQUE/BEN/90/2
Multinational Co. Air Afrique
*
Republic of Côte d’Ivoire
*
Republic of Senegal
Multinational Co. Air Afrique
Multinational Co. Air Afrique
Data
Appraisal
Actual
37 600 000.00
37 576 789.07
23 210.93
Interest rate
Commitment charges
Terms
Loan duration
Repayment
Date of approval
Date of signature
Date of effectiveness
Date of first
disbursement
Date of last
disbursement
Number of extensions
C)
N°
1
2
3
4
5
7.41% per year on the amount disbursed
and outstanding
1% per year on the undisbursed amount,
starting forty five (45) days following
the signature of the loan agreement;
Fourteen (14) years, with a four-year (4)
grace period;
In twenty (20) equal and half years
instalments starting from the fifth (5th)
year following the signature of the loan
agreement.
17/01/90
19/03/90
11/05/90
No change
No change
No change
Gap
None
None
None
None
No change
17/01/90
19/03/90
11/05/90
11/07/90
11/07/90
31/12/93
31/12/94
1
12
months
1
PROJECT DATA
Data
Total cost in UA
Start-up date
Completion date
Length of
Implementation
Overall delay
Appraisal
46 210 000
February 1990
June 1992
28 months
Actual
46 186789.07
March 1990
March 1994
48 months
Gap
23 210.93
1 month
20 months
20 months
20 months
iii
D)
PERFORMANCE INDICATORS
N°
DESCRIPTION
Achievement of objectives
Project cost
Duration of project implementation
Social Impact
Environmental Impact
Project sustainability
Overall project performance
ADB Performance
Performance of the borrower
1
2
3
4
5
6
7
8
9
10
ASSESSMENT
Not satisfactory
Satisfactory
Not satisfactory
Satisfactory
Not applicable
Satisfactory
Not satisfactory
Poor
Not satisfactory
MISSIONS
Date
Missions
Number of
People
August 1989
Appraisal
3
November 1991
Supervision
3
December 1998
Completion report
2
11
Composition
Civil engineer
Economist
Financial Analyst
Civil engineer
Economist
Financial Analyst
Electro-mechanical engineer
Civil aviation engineer
Men/Days
102
12
30
ADB LOAN DISBURSEMENT BY TYPE OF INVESTMENT
Component
AIRCRAFT MAINTENANCE
GV DC10 TUTAM
GV DC10 TUTAL
GV A300-B4 TUTAS
GV A300-B4 TUTAO
GV A300-B4 TUTAT
AIRCRAFT SPARE PARTS
AIRCRAFT RECONFIGURATION
Request N°
RB 01
FR 02
FR 03
RB 05
FR 06
RB 13
RB 16
RB 17
RB 24
TOTAL
RB 21
RB 22
RB 23
RB 24
RB 25
RB 26
RB 27
RB 28
RB 29
RB 32
TOTAL
RB 05
RB 07
RB 11
RP 36
TOTAL
Financing in CFAF
Projected
Actual
1 039 465.19
1 802 750.76
3 765 116.28
2 032 086.20
213 026.91
14 200 000.00
2 124 013.25
687 089.49
2 247 288.40
154 759.75
14 065 596.23
1 224 968.51
1 909 832.48
2 849 931.83
473 514.72
1 047 081.85
37 161.85
9 575 000.00
1 004 428.05
466 810.81
668 048.47
120 594.30
9 802 372.87
273 798.53
290 122.66
231 782.61
795 000.00
272 838.11
1 068 541.91
Gap
134 403.77
-227 372.87
-273 541.91
iv
STOP-OVER EQUIPMENT
COMPUTER EQUIPMENT FOR
REGISTRATION AND SALE
COMPUTER AND OFFICE AUTOMATION
EQUIPMENT
TRAINING O.M.N.
GRAND TOTAL
1
2
Sources of finance
ADB
Air Afrique
FR 06
FR 06 B
RF 08
FR 09
FR 10
RB 11
RB 12
FR 13
RB 14
FR 15
RB 22
RB 33
FR 34
FR 35
RP 36
RP 37
TOTAL
RB 24
RB 30
RB 31
RB 33
FR 34
FR 35
RP 36
TOTAL
RB 01
RB 04
RB 07
FR 13
RB 14
RB 22
RB 33
FR 35
RP 36
TOTAL
RB 24
RB 28
RB 31
FR 35
RP 37
TOTAL
6 190 000.00
2 590 000.00
2 400 000.00
1 850 000.00
37 600 000,00
Number of disbursements
37
1 106 177.19
43 886.80
109 192.45
1 736 911.70
106 228.61
2 933.44
197 280.70
304 133.75
203 176.35
226 587.70
574 570.90
527 062.95
378 312.70
118 057.37
574 638.49
285 297.12
6 494 448.22
30 212.20
891 331.30
424 583.13
53 224.55
249 958.34
81 898.26
194 644.57
1 925 852.35
1 090 725.27
352 227.38
62 962.36
341 364.06
133 487.66
100 521.09
59 959.82
125 056.20
278 135.60
2 544 439.44
747 772.29
546 861.76
206 368.71
121 023.98
53 511.31
1 675 538.05
37 576 789.07
- 304 448.22
664 147.65
-144 439.44
174 461.95
23 210.93
Amount (million UA)
37.60
37.58
8.61
8.61
v
12
COMP.
Aircraft
Maintenance
Spare parts for
Airbus A-310
Equipment (CMA)
Stop-over
Equipment
Computer and
Office Automation
Equipment
Training
Suppliers, Contractors and Enterprises
OPERATIONS
SUPPLIERS
EQUIPMENT
DC-10 TUTAM
KSSU (SWISSAIR)
DC-10 TUTAL
Aircraft overhauling
Airbus TUTAS
SOGERMA
Airbus TUTAO
Airbus TUTAT
Air Afrique
DC-10 TUTAM
Luggage carriers
SWISSAIR
DC-10 TUTAL
DC-10
UTA
DC-10 TUTAN
Airbus Industrie / Aviac / Snias:/ Efer / Intertechnique / Buderus /
Aerospatiale / Sextant / Satair / Sundstrand / Abex Aerospace / Sell
G.M. / Albert Muhlenb / Abb Petercem / Aerazur / Agam Bransom /
Air Precision / Artus/ Auxilec / Safrance / Electro Pneumatique /
Cerebus / Desgranges / Ece / Team/ Teleflex Synerava/ Precilex /
Ametek / Lucas Air Equip / Labinal / Sully Produits / Eros.
Liebher6aero6technik/ Messier Bugatti/ Air Part / Tecnoffan /
Honeykwell Inter / Rackwell Inter / Sextant / Sarma / Messier Hispano
Cargo elevators 7 tons universal
Cargo elevators 7 tons
Albert Industries /Sovan / Passenger stair cases + platform KB
Erma / Aet / Tracma / Matforce 58
/ Clark / Socida / Hobart / Baggage conveyors type CB02
Manutention Africaine / Usimat Tow line tractors
/ Karcher / Babb Et Cie / Forklifts 6 Tons
Hydro6gerate Beau / Star Auto Type TM 16 N Lift truck
/ Unisys
express plate diesel
Registration equipment
Sales equipment
Unisys/ IBM / Bull. / Computer Equipment for the Central Office
Associates / Mannesman Tally /
Cap Sesa Tertiaire / Ier / Its Equipment for Decentralized Offices
France
PNT
Level 200
PACKAGES QU.
1
1
1
1
1
3
1
3
3
4 & 20
4&
1
6
10 & 23
27
28
25 & 30
6
3
1
3
3
AMOUNT
CURRENCY
CONTRACTS
14065596.23
CFAF
Direct
negotiation
1068541.91
CFAF
Direct
negotiation
9802372.87
FCFA
6494448.22
FCFA
1925852.35
2544439.44
1675538.05
Limited
Bidding
FCFA
FCFA
CFAF
Direct
negotiation
vi
EXECUTIVE SUMMARY
1.
The financial, material and organizational situation of the Multinational Company Air
Afrique Company deteriorated to the point that it could not continue its activities. In order to
remedy the situation and save the Company, Member States adopted a Rehabilitation Plan
whose implementation objectives included: the financial rehabilitation of the company, the
settlement of past payments due, future installments and bank overdrafts, the financing of the
social plan and aircraft maintenance. It is within this framework that the African
Development Bank was requested to participate in the reinforcement of the Multinational
Company.
2.
The project involved a total amount of UA 46.21 million, comprising UA 37.6 million
(81%) financed by the African Development Bank and the remainder financed through Air
Afrique owners' equity. The project sought to strengthen the production machinery in order to
restore the company’s transport capacity, as well as improve and master its management and
maintenance of the human and technical operation resources. They were meant to enable the
achievement of a level of human and technical productivity required for production cost
reduction and ensure optimum operation of the Company's network. Over the long term. The
project aimed at ensuring the stability of the Company through the diversification and
extension of activities.
3.
Project implementation took place in acceptable conditions, despite the delay registered
vis-à-vis the initial schedule; project implementation that was to spread over 28 months
recorded an overall time slippage of 20 months. The project underwent major modifications
which required a reallocation of resources and a major changes in the list of goods and
services. The extent of these modifications was such that the project is no longer the same,
and has different objectives. Thus, even if it has contributed to the reinforcement of the
Company's industrial capacities, the initial project objectives were not achieved. At project
completion, Air Afrique did not prepare the borrower's project completion report. The loan
amount has not been exceeded and the project sustainability has technically been ensured, but
remains compromised from the financial standpoint owing to the Company's excessive level
of indebtedness. The project is ranked in the category of operations with unsatisfactory
performance .
4.
Among the lessons learned and recommendations to be made, it appears that the lack
of monitoring and supervision had a negative impact on the project’s implementation and
could make the Bank partly responsible for its overall poor performance. It is recommended
to the Governments to reduce the level of political interference in the management of the
Company, and at least pay a portion of the capital. For Air Afrique, it is vital to put into
application the Bank’s recommendations relating to cost accounting whose implementation
will reinforce the Company's management capacity. As for the Bank, it should require from
the Borrower and the Executing agency the timely preparation of the project progress and
completion reports, in line with Bank procedures.
vii
AIR AFRIQUE
RETROSPECTIVE PROJECT MATRIX
Name of project
Start-up Date
Completion Date
Design team
:
:
:
:
REINFORCEMENT OF THE MULTINATIONAL COMPANY AIR-AFRIQUE
1990
1992
J.B. NGUEMA-OLLO
HIERARCHY OF OBJECTIVES
Sector goal :
Promote air transport as a development cooperation and
integration of African airlines
Project objectives ;


Strengthen the operational capacity of Air Afrique
Improve and ensure efficient management and
maintenance of its operating human and technical means
of operations
Implementation :

Restoring aircraft transport capacities

Improving the industrial capacity

Improving and ensuring the efficient management of the
Company
Components :
A
Aircraft maintenance
B
Stopover equipment
C
Computer and marketing equipment
D
Computer and office automation equipment
E
Training and studies
Activities :

Major aircraft overhauls

Procurement of aircraft spare parts

Reinforcement of industrial centers

Procurement of stop-over equipment

Procurement of the GAETAN System

Procurement of computer systems

Procurement of computer and office automation
equipment

Conversion of flight engineers into Copilots
VERIFIABLE INDICATORS


MEANS OF VERIFICATION
The opening and reinforcement of international routes
Increase in market share

Turnover :CFAF 245 billion in 1995 ; 295 billion in 1997

Number of passengers : 807 000 in 1995 ; 937 000 in 1997

Freight in tons : 47 409 in 1995 ; 48 262 in 1997

Passenger flight hours : 33 827 in 1995 ; 36 454 in 1997

Cargo flight hours : 8 529 in 1995 ; 8 233 in 1997

Productive capacity : 142 158 H/MO. In 1989 ; 149 831 H/MO in 1990

Sizable reduction in sub-contracting costs

Growth in industrial capacity

Repatriation of value-added (profits)

Repositioning on the industrial suppliers market

Training of 40 copilots
Financing :




Increase in unit receipts



Statistics from the Civil Aviation Ministry
Air Afrique statistics
Air Afrique activity reports



Project completion report
Project progress reports
Supervision missions' reports




Status of disbursements
Supervision missions
Award of contracts
Loan agreements
ASSUMPTIONS





Compliance with Member States' Company
Rehabilitation Plan
Privatization of the Company
Weak traffic demand
Sub-contracting of industrial installations
and aircraft
States' interference and intrusion
ADB
: UA 37.58 million
Air Afrique : UA 08.61 million
Total
: UA 46.19 million
Financing Plan
ADB
R.K.
At Appraisal
F.E
L.C
Total
37.60
37.60
5.10
3.51
8.61
On Completion
F.E.
L.C.
Total
37.58
37.58
5.10
3.51
8.61
81.36
18.64
Total
42.21
42.68
100.00
Sources
3.51
46.21
3.51
46.19
%




Satisfactory performance of contractors and
suppliers
Availability of financial resources
Institutional capacity
Compliance with conditionalities
1
INTRODUCTION
1.1
The Multinational Company Air Afrique was established in March 1961 to be the
sole instrument for exercising international traffic rights of its Member States regarding
international air traffic connections. Today, the eleven Member States are : Benin, BurkinaFaso, Central African Republic, Congo, Côte d’Ivoire, Mali, Mauritania, Niger, Senegal,
Chad and Togo. The project context is characterized by a relatively low level of aeronautic
infrastructure, the absence of economies of scale owing to the small size of national airline
companies and very high operating costs. In accordance with its Charter, the joint company
was to be managed in accordance with private law rules and enjoy full management
autonomy untrammeled by any other consideration that does not contribute to the
achievement of its objective under the best economic conditions while providing good quality
service.
1.2
In 1989, the financial, material and organizational situation of the Company
deteriorated considerably to the extent that it could no longer pursue of its activities. Its
institutional framework had deteriorated owing to the cut in the Company's operation
revenues as a result of Member States granting traffic rights without reciprocity to competitor
airlines, the loss of accountability, authority and management autonomy on the part of the
Company's top management organs (the Board of directors and Management), the
competition from national airline companies of Member States which no longer comply with
regulations on proximity flights, the multiplicity of regular foreign carriers and charter
flights.
1.3
To redress the situation and save the Company, Air Afrique member States
unanimously adopted a rehabilitation plan with the following main objectives: i) the partial
and immediate replenishment of the Company's equity capital through a new capital increase
from its shareholders and subsidies in the form of equity resources; ii) the settlement of the
Company's arrears vis-à-vis all of its suppliers and creditors as well as the commensurate reestablishment of its credibility that had been seriously eroded; iii) the sustainable
rehabilitation of the Company's situation through the recovery of its business, the strict
management of its expenses, the renewal and strengthening of part of its equipment. The
attainment of these objectives required: the rehabilitation of the Company's financial
situation, the settlement of installments due on past borrowings (arrears) and those not yet
due as well as bank overdraft facilities, the financing of the social plan (termination benefits)
and aircraft's major overhauling.
1.4
The present report is prepared on the basis of the last progress report from the
borrower, information gathered on the project sites during the mission and the exploitation of
the Bank's documents and archives. The content of the present report takes into account the
degree of attainment of the project objectives, the sustainability of its results, the Bank's
performance, the development impact, lessons learned and the recommendations to be made.
2
2
PROJECT OBJECTIVES
2.1
The project's sector objective is to promote air transport as a factor of development,
cooperation and integration of African airlines, to spread an efficient and viable air transport
system vital to the economic and social development of African countries and in particular
those landlocked .
2.2
The project specifically sought to reinforce the production machinery with a view to
restoring its transport capacity, improving and ensuring the efficient management and
maintenance of its operating human and technical resources.
3
3.1
PROJECT FORMULATION AND DESCRIPTION
Project Formulation
3.1.1 The Multinational Air Afrique Company's financial, material and organizational
situation had deteriorated to the point that its activities could no longer be continued. To
remedy this situation and save the Company from collapse, member States adopted a
rehabilitation aimed at achieving the following objectives: rehabilitation of the Company's
financial situation, settlement of instalments due on past borrowings (arrears) and those not
yet due as well as bank overdraft facilities, financing of the social plan ( termination
benefits) and aircraft's maintenance. It is within this framework that a request was made to
the African Development Bank to participate in financing the reinforcement of the
Multinational Company.
3.1.2 The coverage of the rehabilitation plan cost was to be provided by subsidies, advances
from shareholders current accounts financed through a borrowing external to the member
States, the rescheduling of bank credits, a long-term borrowing and internal financing. It is
within this context that the African Development Bank was requested to participate in the
financing of the Company's rehabilitation plan.
3.1.3 Following a financing request introduced by Air Afrique, the Bank appraised the
project in August 1989. It involved a total cost amounting to Bank Unit of Account 46.21
million (BUA), of which UA 37.6 million (81%) was earmarked for financing by the African
Development Bank (the Bank), in accordance with the terms of the loan agreement signed
between Air Afrique and the Bank on 19 March 1990 and which became effective on 11
May 1990. The deadline for the mobilization of funds was contractually set at 31.12.93 or
any later date agreed upon by the parties.
3.2
Project Description
The Bank loan was to finance the following project components :
A.
Aircraft Maintenance :
3.2.1 Air Afrique fleet maintenance programme together with the different overhauling
operations scheduled throughout the lives of the aircraft were carried out by the RSSU/UTA
for the 3 DC-10, Air Afrique for the 3 AIRBUS and UTA for the DC-8 with regard to A and
C types of overhauling. The D overhauling operations for the DC-10 were carried out by
KSSU/SWISSAIR for the AIRBUS, by SOGERMA and for the DC-8 by UTA. This was
3
highly costly for the Company. The Dakar industrial center covered under the same authority
an aircraft shop and an equipment overhaul shop. These shops currently provide for the
maintenance of the Company's AIRBUS planes and that of some third party companies in so
far as overhaul operations A and C are concerned. The new policy that was put in place
aimed at retaking a portion of the maintenance expenses sub-contracted outside. Thus, the
maintenance of the Company's 3 DC-10 and the DC-8 Cargo will be gradually transferred to
the Dakar industrial center. All the Company's airplanes will after 2 years, be maintained up
to the equivalent of inspection in the Company's aircraft shops in Dakar, by its own
technicians trained for these kinds of duties through training workshops funded under this
project.
3.2.2 The Abidjan accessory overhaul center is mainly oriented toward radio repair and
servicing. It also comprises a workshop for the service and repair of on-board instruments,
electro-mechanic workshop and a meteorological workshop geared to the verification and
adjustment of precision instruments.
3.2.3 The Brazzaville industrial center mainly deals with aircraft production activities,
related workshops, works planning and preparation, supplies and storage, line maintenance,
garage, industrial management and production control. In view of the fact that the current
workload of the Brazzaville industrial center is not sufficient to cover the employment of the
staff allocated to it, it will be necessary for these centers to find external markets for the
maintenance of light aircraft in view of the fact that the current installations and equipment
do not allow to handle heavy carriers. The first investigations carried out showed that a
potential market whose maintenance could be carried out by the Brazzaville center exists in
the region.
3.2.4 Thus, the Company will recover part of the maintenance expenses sub-contracted
externally with a view to totally carry out in the future, all the inspections (with the exception
of the main overhaul) on its own site by its own technicians. It will also have to diversify its
maintenance activities to meet the demand by local companies for maintenance of some
airplanes in the central sub-region. This decision will have to be based on the Company’s
definition of an industrial policy. The latter will be established following specific studies. The
production of the Company's industrial strategy policy paper will be made a loan condition.
B.
Airplanes Reconfiguration :
3.2.5 This component consists in increasing in the number of seats of aircraft and the
installation of luggage carriers on the Company's DC10s.
C.
Stop-over Equipment :
3.2.6 The stock of operating equipment and was no longer reliable because it was not
replaced often enough. Equipment of more than 10 years of age were the greater in number,
most of which needed to be recondition.
D.
Computer Equipment for Marketing :
3.2.7 The computerized registration system (GAETAN ) and the Alpha 3 marketing
applications system used by Air Afrique were installed in May 1973, for passenger
registration and handling and for the processing in real time of all operations related to the
4
handling of passengers and freight (passenger reservation and services related to air transport,
automatic treatment of prepaid ticket and automatic tariff and ticket issue system). Both
systems required upgrading.
E.
Computer and Office Automation Equipment :
3.2.8 The performance levels of the Abidjan computer center and the computer center of
the Port -Bouët freight were unsatisfactory owing primarily to the problems posed by the
growth in the volume of data and the obsolescent mechanical power, communication
networks and the operating system
F.
Training - Studies:
3.2.9 The training programme comprised internships in Abidjan as well as abroad. These
training modules were focused on commercial correspondence, computerized operations,
marketing/reservation/control, on operations/automatic bookings, on financial/management
control and on training technical flying staff from Air Afrique member States. The
component also provides for the procurement of teaching aids. The implementation of the
Company's Recovery Plan calls for a number of studies on marketing, data processing,
human resources and development studies.
4
PROJECT IMPLEMENTATION
4.1
Effectiveness, Start-up and Implementation Schedule
Effectiveness
4.1.1 The entry into force of the loan agreement was subject to seven conditions precedent
and three other conditions contained in the loan agreement (cfr. Annex 7). All these
conditions were fulfilled by Air Afrique and the loan became effective in May 1990 with the
joint guarantee of the Republic of Côte d'Ivoire and the Republic of Senegal.
4.1.2 Furthermore, following the Bank's recommendations to ease measures imposed on
other airlines regarding traffic limitation, agreements were negotiated and concluded with the
latter in November 1991.
Start-up
4.1.3 At appraisal, the start-up date was set for March 1990. Works effectively started on 12
March 1990 with the overhauling of the first aircraft.
Implementation Schedule
4.1.4 At the time the project was appraised, the implementation schedule envisaged the
completion of all the project components by the end of June 1992, i.e., over a two year
period. Even though the project was completed in March 1994, it registered an overall time
overrun of 20 months compared to the initial programme. The deadline for the last
disbursement was set at 31/12/93, then extended to 31/12/94 at the Borrower's request.
5
4.2
Modifications
4.2.1 The project has undergone modifications needed to adapt it to the growth of Air
Afrique Company. The modifications concerned primarily the B component of the project
which had become practically irrelevant following the decision by the Company's Board of
Directors in May 1990, to renew the fleet. The other modifications were minor and concerned
rather some readjustments within the same component. The project was implemented on the
basis of these revised components.
Aircraft Maintenance
4.2.2 After the overhauling scheduled for the five airplanes, Air Afrique proceeded with the
sale of one DC-10 and put the second on lease. This change derives from the decision by the
Company to immediately acquire four new Airbus A-310 planes. The funds earmarked for
the acquisition of spare parts (for the A-300, DC-8 and the DC-8 replacement engines) were
utilized to rebuild the initial stock of spare parts, required for the operation and maintenance
of Airbus A-310 planes. In the procurement of equipment for the industrial centers, specific
tools for the maintenance of the Airbus A-310 planes were incorporated.
Aircraft Reconfiguration
4.2.3 This component was canceled; only the installations of the overhead lockers in the
DC-10 were implemented.
Training and Studies
4.2.4 Resources earmarked for this component were utilized for the conversion of DC-10
flight engineers into copilots for the Airbus A-310 planes.
4.3
Impacts of the modifications on project objectives
At appraisal, the fleet renewal was scheduled for the medium-term and was not part of
the project objectives. In July 1990, or two months after loan effectiveness, Air Afrique
proceeded with the firm order of four Airbus A310-300 planes. This decision is the basis of
the modifications referred to above and that led to the need for the reallocation of resources
and an in-depth modification of the list of goods and services. The extent of these changes
was such that it led to completely different objectives. The table in Annex 2 gives a summary
of the components that were affected by these changes. The latter were approved by the Bank
in April 1992.
4.4
Procurement of Goods and Services
The requirements for procurement of goods and services were met but with some
difficulties concerning the following:
i)
The procurement of aircraft spare parts and equipment for the industrial maintenance
centers was to be procured through international competition limited to package dealers. The
difficulties encountered in the procurement of this equipment were due to the fact that the
6
building of the initial stock of spare parts and the specific equipment for new planes was not
provided for at project appraisal.
ii)
The procurement of equipment for the computerized booking system (GAETAN) and
the computer equipment for marketing (ALPHA3) were to be on the basis of international
competition limited to manufacturers of the specified equipment. The procedure envisaged
was not followed by the Company. For reasons of compatibility with the existing equipment,
Air Afrique requested the Bank's authorization for the procurement on the basis of direct
negotiation with its old suppliers. The Bank gave its consent for direct procurement direct.
4.5
Reporting
During project implementation, Air Afrique submitted two progress reports on the
project to the Bank, the first in July 1991 and the second in September 1993. The Executing
Agency did not prepare the project completion report, nor did it submit audit reports to the
Bank.
4.6
Project Outputs
All the components of the modified project were implemented as follows:
Aircraft Maintenance
4.6.1 This component comprised major aircraft servicing, the procurement of spare parts for
airplanes and the strengthening of industrial centers (procurement of tools required for the
maintenance of new airplanes). All these sub-components have been implemented in
accordance with the pre-established timetable. The Company's industrial centers have at their
disposal spare equipment allowing them to undertake the variety of scheduled servicing for
the entire new fleet. The component on aircraft reconfiguration comprised two subcomponents: Increasing the total number of seats in old airplanes which was scrapped in
view of the fleet renewal and the installation of overhead lockers which was implemented on
the DC-10.
Stopover Equipment
4.6.2 The programme concerning the partial renewal of equipment for handling airplanes
on stopover was implemented fully and on schedule. However, it is worthwhile mentioning
the fact that the implementation of this component relieved only partially the Company's
needs, in view of, on the one hand, the obsolescence of the fleet, and the growth in activities,
on the other. The stopovers visited, Dakar and Abidjan, in particular,
their performance is strongly affected during the high seasons. The stopover station managers
and the equipment department have deplored incidences connected with the shortage of
equipment, stock the spare parts supply policy and the choice of some equipment.
Computerized Registration and Sale System
4.6.3 This concerns the "GAETAN" equipment (for the automated booking of passengers
and flight management) and ALPHA 3 and PELICAN (for transport and freight sales). These
equipment comprised screens (162), boarding pass and luggage tag printers (150), control
desks (8), optical scanners (2), printers (94) and telecommunications equipment (modems,
7
inverters, connectors, cables, etc..). These were procured during the first quarter of 92 and the
deliveries were spread over until March 93, depending on the Company's requirements.
Computer and Office Automation Equipment
4.6.4 This component groups together the Headquarters’ computer equipment. This
concerns the procurement of 200 micro-computers, 210 printers, software, the setting up of
the Company's training center in Abidjan, of the required logistics for personnel training on
this equipment. The procurement of the Headquarters' equipment was fully implemented
before year-end 1990. With regard to office automation equipment, the item was modified
taking into account the Company's real needs. These needs were met and constituted the
starting point of Air Afrique's computerization policy. This component was implemented
within schedule.
Training of Flight Engineers (OMN)
4.6.5 This component concerns the conversion of flight engineers (OMN) into copilots on
the Airbus A310, in view of the removal of this specialty post on the A310 Airbus planes
(piloting at 2 on the A310 instead of 3 on the DC-10 and A300 aircraft). This training
concerned 40 staff members and was completed towards year-end 1994.
4.7
Costs, Financing and Disbursements
Costs
4.7.1 The total project cost was appraised on the basis of economic conditions prevailing in
October 1989 using existing studies and historic costs. The cost stood at UA 46.21 million, of
which UA 42.70 million in foreign exchange and UA 3.51 million in local currency.
8
Financing
4.7.2 The ADB loan totaling UA 37.60 million, was used to finance the entire foreign
exchange cost representing 88.06 % of the total project cost. The balance of the financing
was covered by Air Afrique.
Disbursements
4.7.3 The initial deadline for the last disbursement was set at 31/12/93. In view of the
delays recorded in the implementation of the project, the deadline was extended once to
31/12/94. The project was the subject of 37 disbursements from the Bank for which no
particular difficulties were encountered.
4.8
Performance of suppliers and contractors
4.8.1 The implementation of the components "aircraft maintenance" was satisfactory, in
view of the rigor required in the air transport industry. Aircraft servicing was carried out
within the established schedule and the deliveries of spare parts, tools and equipment for the
industrial centers in conformity with the orders. The same applies for stopover equipment.
4.8.2 The delay registered in the procurement of computer equipment for the automated
booking and sales, was due to the non compliance by Air Afrique with the Bank's rules of
procedures for procurement of goods and services as stipulated in the loan agreements.
However, this did not have any significant impact on the project and had no bearing on the
suppliers.
4.8.3
Overall, the technical performances of the contractors and suppliers were satisfactory.
5
PROJECT PERFORMANCE
5.1
Institutional Performance
5.1.1 Air Afrique was the project’s Executing Agency. It ensured the preparation of tender
documents, analysis of bids, award of contracts as well as the supervision of the project
implementation. A project monitoring committee made up of heads of the various
departments concerned was put in place headed by a coordinator reporting to the General
Directorate. In March 1989, a study on the Company’s restructuring was carried out with the
view to better control the important rehabilitation plan. The new organizational chart is
characterized by a concentrated structure and a reduction in the number of decision-making
centers. At the management level, the Company continues to suffer from the lack of cost
accounting, thus making it difficult to identify less performing units
5.1.2 From the technical viewpoint, the implementation of the project has been carried
satisfactorily manner, but not rigorously. From the administrative viewpoint, shortcomings
were identified in the preparation of quarterly and project completion reports.
5.2
Operational Performance
5.2.1 In the appraisal report, the implementation was scheduled to take place from March
1990 to June 1992. Works were effectively launched in March 1990. These were completed
9
in March 1994, with a 20 month delay compared to the initial programme. The delay is due to
the cancellation of the reconfiguration component (increase in total number of seats) of older
aircraft, following the decision to renew the fleet, difficulties encountered by the Company in
complying with some procedures for the procurement of goods and services (aircraft spare
parts equipment). In July 1991, Air Afrique and the Bank had discussions on the
modifications that the Company wished to introduce to the project. Furthermore, the
acquisition of Airbus A.310 planes necessitated the conversion of flight engineers on DC-10
into copilots. This training not envisaged at project appraisal, went on until year-end 1993,
thus having an impact on the project implementation.
5.2.2 On the industrial plan, the Company had three centers: Dakar for aircraft and
equipment maintenance, Brazzaville for aircraft maintenance and Abidjan for maintenance of
radio and meteorological equipment. The Dakar Industrial Center (CID), the most important
is currently oriented toward heavy maintenance of Airbus planes («A» and «C» types checks
and soon «IL» checks for 25 000 hours labor, «D» check for 35 000 hours labor). The «D»
overhauling has always been done outside. The Brazzaville Center for Aircraft (CMAB) was
in large part destroyed by the various civil wars in the country. The remainder of the
equipment was transferred to Pointe-Noire, Abidjan and Dakar according to the Company's
needs. Regarding this unit, the Company should undertake a study on its future industrial
policy, in view of the heavy losses already incurred. The Abidjan Maintenance Center
(CMA), which from the start was responsible for the maintenance of radio and
meteorological equipment, in addition took the task of repair and maintenance of B-737-200
and 737-300 planes leased by Air Afrique.
5.2.3 With regard to the management of spare parts, an emphasis should be put on the very
high level of stock: approximately CFAF 52 billion (41 for the rotating and 11 for the
consumables). This item ought to be the subject of study between the account and the
technical units. Indeed, this amount does not reflect the real value of this inventory and
comprises further some of the Company's fixed assets. The improvement in the inventory
management is necessary and requires the recruitment and training of inventory store-keepers
with a better computer mastery.
5.2.4 The maintenance costs represented 6.5% of the net costs and stood at CFAF 16.5
billion in 1997. Compared to the means put in place, the workload remains low. A dynamic
marketing policy was carried out (especially with regard to African countries) to make these
investments more profitable. The industrial labor cost at Air Afrique is very competitive; it
was quoted at CFAF 18000/hour of work compared to nearly CFAF 35000/hour in Europe.
This very low rate, was revised and increased to CFAF 25886 / hour as from year-end 1997.
5.2.5 Air Afrique has at its disposal high level industrial and human resources and holds the
certification (the American Federal Civil Aviation Administration - FAA) for the
maintenance and control of aircraft equipment. Currently, the Company is preparing for the
award of the JAR 145 Certification (new European Agreement) required to allow Air
Afrique undertake aircraft repair and maintenance works incumbent on their administrative
services. The only works still being sub-contracted are ones for which it is not economically
profitable to invest for their maintenance locally (such engines). The Company's operational
performance is very satisfactory.
5.3
Economic Performance
5.3.1 At appraisal, the project which fits within the global framework of Air Afrique
Company's restructuring programme should, from the economic view point, resulting in: i)
10
the strengthening of the market for air transport in terms of traffic growth at the rate of 3 %
per year on the average; ii) the reduction in the maintenance cost of the fleet thanks to new
installations provided for Dakar and Abidjan; iii) the improvement in human resources
through training modules suited for the requirements.
5.3.2 At completion, it was noted that the gap between the projected traffic and actual
traffic was relatively small as shown in the table below :
Traffic
in million per km transported (PKT)
Years
Projected traffic
Actual Traffic
1990
2505
2397
1991
2581
2068
1992
2658
2233
1993
2733
2293
1994
2818
2352
1995
2905
2454
1996
2991
2514
1997
3081
2904
5.3.3 Based on the table, the average growth rate of actual traffic stood at nearly 2.9% as
against 3% at appraisal. It can therefore be inferred that the objective of traffic growth was
nearly achieved.
5.3.4 With regard to the saving on the maintenance cost of equipment, installations
effectively put in place in Abidjan and Dakar should have been enough to enable the
Company undertake on the site the major servicing, which until then were provided abroad.
The intended objective is to bring the rate of external sub-contracting which represents 40%
of the aircraft maintenance activities down to 20%, which would represent a saving of
approximately CFAF 3 billion per year.
5.3.5 Following the purchase of new airplanes by the Company, purchase which represents
one of the major elements of modifications registered at the level of the overall programme,
the overhauling have not yet started according to schedule at appraisal. The modernization of
the fleet thus decided by the Company management, contrary to the appraisal estimates,
constitutes the single major cause of this delay. The very first overhauling was carried out at
the Dakar Maintenance Center from March to April 1999. The savings expected from this
first operation is estimated at nearly CFAF 250 to 300 million. When completed, the
industrial plants will therefore enable the recovery of a large portion of maintenance costs for
new aircraft, with the secondary effect of substantial savings in foreign exchange, the
development of technical staff and the improvement in the Company's cash position.
5.3.6 In contrast, the objectives of the “Training” component were fully achieved. In fact,
not less than 626 staff were trained as planned through training of one to three weeks in areas
such as commercial correspondence, data processing, the automated operation/reservation,
management, etc. The most important sub-component is the conversion of flight engineers
into copilots for certain types of aircraft; this training has been implemented at the level 40
staff against 36 at appraisal.
5.3.7 With regard to the project’s economic rate of return on completion, it was not
calculated for a principal reason: the overhaul to be carried out locally (Abidjan and Dakar),
and that constitute the key source of projected economic benefits have not yet started. As a
result, no trends in the growth of savings on the maintenance costs can yet be assessed which
would allow to make medium-term estimates on a real basis.
5.4
Financial Performance
11
5.4.1 Air Afrique financial position was characterized, at the time of the project appraisal,
by an operating result in deficit, a declining trend in revenues and low parameters of
profitability and balance that fall below the usual benchmarks. At the time of the preparation
of the project completion report, the analysis of this situation gives indications of a slight
improvement between 1992 and 1994, and then a worsening situation thereafter. This is the
result of inadequate programming of investments and marketing planning : for instance, in
the financial projection assumptions, a Bank loan of CFAF 15.226 billion and an allocation of
CFAF 30 billion are taken into account for the renewal of fleet in the medium-term. In actual
fact, with the acquisition of new airplanes, Air Afrique took another commitment of nearly
CFAF 90 billion through internal financing over the same period. This new commitment,
given its size, strongly affected the Company's repayment capacity. Air Afrique's financial
statements are summarized below:
Operating Accounts
(in million CFAF)
1989
Income from flight operations
Other income
Miscellaneous
commissions)
Reversals
Total income
revenues
(PF
and
Flight expenses
Structure Expenses (sale, stopover)
Other expenses (FF, exchange loss)
Allocations to depreciation and provisions
Total expenses
Net income
Cash Flow
1990
111
220
15
736
16
786
1 051
144
793
117
397
13
744
7 237
78
294
31
214
24
821
10
097
144
426
367
83
185
35
448
12
204
8 784
10
464
8 944
1 403
139
781
139
621
160
1991
1992
1993
113
766
14
068
12
825
2 990
143
649
120
618
13
477
12
878
923
147
896
120
741
12
483
12
025
611
145
860
80
986
33
532
16
584
12
329
143
431
218
80
725
36
062
19
090
11
754
147
631
265
83
998
40
239
18
197
11
869
154
303
-8 443
12
547
12
019
3 426
1994
213
110
21
615
17
856
764
253
345
1995
951
249
474
145
154
150
337
410
697
52
61
65
979
593
129
35
37
32
658
557
457
21
24
24
321
715
754
255
278
273
295
275
037
-1 950 -15 937 -23 563
155
262
65
944
34
808
31
214
287
228
-6 573
8 778
215
983
22
923
9 617
1997
229
612
25
410
23
283
2 350
280
655
19
371
223
549
19
500
16
648
2 641
262
338
1996
1 191
24
641
5.4.2 The analysis of this table shows stagnating revenues and a worsening income
position. In addition to inadequate planning, it is worth pointing out that that as from 1994,
the devaluation had a negative impact owing to an inadequate offsetting at the level of
receipts. The different lines of expenses increased by more than the receipts. The cash flow
was low and led Air Afrique to revert to long-term borrowing, as well as overdraft and other
short-term facilities.
Comparative Balance Sheets (1989-1997)
(in million CFAF)
1989
1990
1991
1992
1993
1994
1995
1996
1997
Assets
Fixed assets
Intangible assets
Financial fixed assets
Total fixed assets
423
454
889
774
641
882
775
736
441
47 736
58 051
75 163
100 707
111 806
228 432
219 669
203 523
190 557
3 274
3 660
4 024
3 816
2 703
7 107
5 372
5 413
6 717
51 433
62 165
80 076
105 297
115 150
236 421
225 816
209 672
197 715
12
Stocks
22 634
25 879
4 926
6 248
6 210
13 391
11 492
11 062
9 811
Current assets
22 276
3 609
22 917
26 552
27 867
41 624
39 156
45 622
43 486
Liquid assets
1 872
2 883
126
136
6 762
11 989
8 504
10 726
11 810
Adjustment accounts
8 695
12 602
11 137
13 675
17 667
18 043
18 174
18 090
23 591
55 477
44 973
39 106
46 611
58 506
85 047
77 326
85 500
88 698
106 910
107 138
119 182
151 908
173 656
321 468
303 142
295 172
286 413
Equity
9 961
10 327
10 487
15 749
16 314
55 898
53 948
38 011
14 749
Provisions for losses and exchanges
8 429
8 560
5 909
7 294
8 721
14 161
13 804
17 262
16 470
Long-term debt
34 087
34 569
50 352
80 234
107 615
200 211
199 304
191 807
120 317
Operating debt
40 667
34 880
32 325
32 470
34 984
37 472
37 273
50 565
124 490
Adjustment accounts
13 399
18 642
19 891
15 896
14 465
15 676
14 750
21 090
16 960
367
160
218
265
-8 443
-1 950
-15 937
-23 563
-6 573
106 910
107 138
119 182
151 908
173 656
321 468
303 142
295 172
286 413
Current assets
Total
Liabilities
Income for period
Key financial indicators
Working capital
1 411
-8 549
-13 110
-1 755
9 057
31 899
25 303
13 845
-52 752
Liquidity ratio
1.03
0.84
0.75
0.96
1.18
1.60
1.49
1.19
0.63
Debt-equity ratio
0.65
0.64
0.75
0.77
0.87
0.75
0.79
0.86
0.83
5.4.3 Air Afrique’s financial structure improved between 1994 and 1995, but as from 1996,
the situation started to deteriorate before worsening in 1997. The liquidity position was tight
and the level of indebtedness worsened. The new ambitious investment option without a
supporting marketing plan was at the source of this indebtedness beyond proportion, and
which was not eased by a surplus operation.
5.4.4 After the overhauling and the utilization of new airplanes in the fleet, a net growth in
receipts and expenses related to new aircraft and to the stability of the fleet was observed
during this period. The Company's gross revenues increased from CFAF 139.582 billion in
1992 to 255.595 billion in 1994 and 295.401 billion in 1997. Concurrently, expenses
increased from CFAF 124.831 billion in 1992, 212.735 billion in 1994 and 242.785 billion in
1997. In spite of a sharp cut in personnel that took place as from 1990, the workforce going
from 5240 to 4150, personnel expenses were not under control; on the contrary, the expenses
increased from CFAF 17.418 billion in 1992, 20.244 billion in 1994 and 24.567 billion in
1997 (excluding expenses related to flight personnel).
5.4.5 Furthermore, equipment and spare parts should have allowed the Company to carry
out the overhauling on its own which until then were done outside. Out of Airbuses, this
overhauling took place after 12000, 20000 and 29000 hours of flight (type D) and represent
nearly the equivalent of 35 to 40000 hours of work. Done outside, an overhauling operation
costs about 2.2 billion. The first overhauling which will be carried out at the Dakar
Maintenance Center was programmed for March 1999. The expected saving from this
operation is estimated at CFAF 250 to 300 billion. This estimation is based on the experience
acquired by Air Afrique which has just carried out an intermediate servicing (type IL)
covering 25000 hours of work on an Airbus and which cost CFAF 877 million to the
Company, as against CFAF 960 million, if it was carried outside. The rate of sub-contracting
outside stands currently at 40% and Air Afrique aims at bringing that rate to 20%, which will
generate savings of nearly CFAF 3 billion per year.
5.4.6 In the area of stopover assistance, procurement of hauling equipment made it possible
to strengthen the capacity to handle airplanes. This activity technically called «handling »,
created nearly 1520 jobs and in 1997 generated total revenues of about CFAF 23.8 billion for
13
services rendered to third party companies. The cost savings realized by Air Afrique through
self-assistance reached nearly CFAF 29.6 billion.
5.4.7 The Executing Agency did not provide the project completion report. In view of the
major modifications to project (cfr. para 4.2), the original assumptions are no longer
applicable, and it is no longer possible to calculate the IRR on a new project configuration.
The financial performance of the project remains very worrisome.
6
SOCIAL AND ENVIRONMENTAL IMPACT
6.1
Social Impact
The acquisition of new aircraft made it possible for flight engineers to be converted into
copilots on the Airbus 310. This promotion from the career standpoint is an illustration of
improvement in their standard of living in terms of salary. The project had positive impact on
the lives of 40 flight engineers. Furthermore, as an integral part of the overall rehabilitation
plan, the project made it possible to save the Company, thus leading to social impact of even
greater magnitude.
6.2
Environmental Impact
Air Afrique's planes are of the last generation. They are equipped with engines that
meet the acoustic standards of the International Civil Aviation Organization (ICAO), in its
requirements in the area of noise nuisance. This applies equally to fumes issuing from the
aircraft engines. The project had only negligible environmental impact.
7
PROJECT SUSTAINABILTY
The sustainability of the project is doubtful in view of the Company's current situation,
but a plan for the optimal utilization of the Dakar and Abidjan Maintenance Centers for the
requirements of Air Afrique, together with sub-contracting for other airlines will make it
possible to save the project financed by the Bank.
14
7.1
Sustainability Factors
To make the project's achievements more sustainable, it is necessary that :
i)
ii)
iii)
iv)
7.2
the industrial installations should not be underutilized and the capacity for
maintenance of aircraft and handling equipment at stopovers be maintained and
reinforced;
The company should improve its productivity and develop alliances with bigger
European and other African companies,
Member States should give priority to the Company's financial return at the detriment
of lax management and settle their payment arrears on transport tickets issued on Air
Afrique,
Institutional support should be given to the Company with the view to reinforce its
financial structure and consolidate its control and management procedures.
Technical Sustainability
7.2.1 From the technical standpoint, the procurement of new equipment enabled the
Company to reinforce and make notably sustainable its industrial capacities. At project
appraisal, the objective was to enable the Company to carry out aircraft checks up to the level
«C». With overhaulings of the «IL» and «D» types which are currently being provided at the
Dakar Center, this objective is outdated. The project’s technical sustainability is therefore
satisfactory.
7.2.2 Furthermore, the handling equipment for major stopover airports, i.e., Abidjan and
Dakar is obsolete and inadequate. This constraint is much more acute during high seasons, to
the extent that the «clearance » services encounter the problem of congestion and do not
manage to absorb the surplus traffic from the standpoint of stopover assistance. This seriously
jeopardizes the Company's sustainability.
7.3
Financial Sustainability
The renewal of the fleet, whose effects have not been adequately determined, has
strongly impacted on the Company's financial position. Besides, in the area of tariff fixing,
the Company encounters difficulties to have member States approve the tariff ranges
recommended by IATA (International Air Transport Association) and by ATAF (Association
of Airlines, Zone Franc), organs which regulate this activity in consultation with airlines.
These tariff adjustments enable airline enterprises to ensure financial balance of their
operations, every time they are adopted. Moreover, the sale of one DC10 which came from
repair within the framework of this financing, jeopardized the financial sustainability of the
project.
15
8
PERFORMANCE OF THE BANK AND THE BORROWER
8.1
Bank Performance
8.1.1 The Bank appraised the project in August 1989 and undertook a supervision mission
in November 1991. It did not, therefore, ensure regular monitoring of the project.
8.1.2 Given the scope of the modifications requested by Air Afrique and their future
impacts on the Company's financial situation, the project ought to have been resubmitted to
the Board for approval. Furthermore, discussions between Air Afrique and the Bank on the
modifications started in July 1991 and the Bank gave its approval in April 1992, that is with a
10-month delay. The Bank reaction time was too long compared to the urgency of the
problem at hand.
8.1.3 Furthermore, the Bank did not adequately apprehend the impacts of the modifications
on the Company's financial position before their approval. The project concerned commercial
air transport with a strong industrial bias. The Bank expertise in this project follow up was
not appropriate in order to control the risks involved in these sensitive fields that are in
perpetual motion. For all these reasons, the Bank performance was unsatisfactory.
8.2
Performance of the Borrower
8.2.1 The conditions precedent to first disbursement were fully met by the borrower. The
Company financed the foreign and local costs that were attributed to it in accordance with the
financing plan and representing 18.63% of the total cost of the project.
8.2.2 Before project appraisal, the Company’s organization was highly organized into a
hierarchy, rendering the implementation of the rehabilitation plan uncertain owing to very
high operating costs and poor performance. In March 1989, a study on the restructuring of the
Company was carried out. The new organizational chart is marked by a concentrated
structure and a reduction in the centers of decision-making.
8.2.3 In the area of management, the computer equipment delivered in the framework of the
project should lead to the complete revamping of the Company's computerized accounting
and financial system, one of whose major objective was to establish a cost accounting system,
which would have made it possible for the Company to better assess the economic
contribution of each activity and each line, and thus their profitability. In addition, the
Company registers a significant delay in recording receipts, thus making the clearing with
other companies difficult. To this date, cost accounting is still not operational; Air Afrique,
therefore makes a bad utilization of the computer equipment put in place.
8.2.4 The Borrower has prepared two work progress reports during the entire duration of
the project, whereas the latter were to be prepared on a quarterly basis. It did no submit the
project completion report either as provided for in the Bank's procedures.
8.2.5 With regard to loan repayment, the Bank took as safeguard to request the guarantees
of Côte d’Ivoire and Senegal. The installments due on 31 January 1999 were settled by these
two States for a total amount of French Franc 23,621,218.16. The amount outstanding covers
10 installments payable until January 2004. This guarantee has enabled the Bank to receive
16
reimbursement to this date. For all these reasons, the borrower's performance is
unsatisfactory.
9
ASSESSMENT OF THE OVERALL PERFORMANCE OF THE PROJECT
The analysis of results relating to each criterion of the overall performance is given
below.
9.1 Achievement of Project Objectives
9.1.1 All the project components were implemented after the modifications approved by the
Bank. The performance relating to the physical implementation of the project was
satisfactory.
9.1.2 However, the project should enable the Company to achieve a high level of
productivity on the equipment and personnel with the view to cutting costs and ensuring an
optimum operation. In the long term, through these diversified and strong actions, the project
aimed at reinforcing the Company, However, Air Afrique is currently going through a
difficult period owing to the deterioration in its financial situation. The project objectives in
this area were not achieved.
9.2
Project Costs
After the implementation of the project, there was a balance of UA 23,210.93 for
which Air Afrique requested cancellation in December 1995. In spite of reallocations made in
the list of goods and services, requiring supplementary resources for some project
components, and in spite of delays recorded in the implementation of the project, the Bank
loan amount has not been exceeded. The performance from this standpoint was satisfactory.
9.3
Duration of Project Implementation
The implementation of the project recorded a 20-month time delay. The
implementation performance was not satisfactory.
9.4
Social and Environmental Impacts
The project enabled the conversion of flight engineers into copilots on the A310, thus
contributing to the improvement in their standards of living in terms of salary increase.
Generally, the project has contributed to the recovery of Air Afrique and to the improvement
in working conditions within the Company. Furthermore, the project had only negligible
environmental impacts, in view of the nature of operations and the contexts in which these
were implemented.
17
9.5
Sustainability of the Project
From the technical standpoint, the sustainability of the project was ensured given the
availability of competent personnel, efficient equipment, the stock of spare parts sufficient
enough to fully cover the scheduled maintenance. However, the sustainability of the project is
likely to be affected by the Company's financial position marked by an excessive level of
indebtedness.
9.6
Internal Rate of Return of the Project
At appraisal, the project financial rate of return was estimated at 13.1% and the
economic rate of return at 21.26%. The change in the initial design of the project no longer
allows for the calculation of the project’s internal rate of return.
9.7
9.7.1
Assessment of the Project’s Overall Performance
The assessment of the project’s overall performance can be summarized as follows:
Assessment
Criteria
Attainment of objectives
Project cost
Length of project implementation
Social and environmental impact
Project sustainability
Total out of 100
Rating
Weighting
Ratio
Over 5
Overall
6
3
3
3
5
2.5
3.5
1
3
2.5
15
10.5
3
9
12.5
50
9.7.2 The application of the assessment and rating scales resulted in an overall ranking of
50 over 100, thus classifying the project in the category of operations with unsatisfactory
performance.
10
CONCLUSIONS, LESSONS AND RECOMMENDATIONS
10.1 Conclusions
The project was executed in March 1994, despite some difficulties in implementing
some components started and an overall time overrun of 20 months compared to the initial
schedule. The project was implemented in acceptable conditions, however its did not achieve
its objectives even though it contributed to the reinforcement of the Company's industrial
capacities. The loan amount was not exceeded. The project sustainability was ensured from
the technical standpoint, but remained at a disadvantage from the financial standpoint, owing
to the Company's high level of indebtedness The project was ranked in the category of
operations with unsatisfactory performance.
18
10.2 Lessons
The lessons to be drawn from the project’s implementation are the following :
i)
A significant change in one or several project components can lead to considerable
delays in its implementation and its operational and financial performances;
ii)
A bad decision in the investment programme can have serious consequences on the
Company's financial position;
iii)
The deterioration in the institutional framework, reduction in business, loss of
accountability, authority and management autonomy of the Company's natural
decision-making organs had a negative impact on the operational and management
results;
iv)
Inadequate monitoring and supervision can have a negative impact on the
implementation of the project and can make the Bank in part responsible for the
project’s poor performance overall.
10.3 Recommendations
10.3.1 For Governments
i)
Undertake a good assessment of the Company's restructuring policy primarily
focusing on the efforts, strategies, measures and orientations on the financial viability
of the Company and the sustainability of the projected project results;
ii)
Carry out an optimum planning of investments that take into account the relation
between «operational expenses and debt service » in order not to exceed the
Company's debt repayment capacity;
iii)
Reduce political interference and divest from the direct management of the Company,
or at best, open up part of Air Afrique’s capital;
iv)
Reinforce the institutional support of the Company and meet, on a timely basis, the
transport tickets issued on Air Afrique.
10.3.2 For Air Afrique
i)
ii)
iii)
iv)
v)
When preparing the investment programmes, account should be taken of financial
constraints whose bad assessment can jeopardized the Company's debt repayment
capacity;
Improve the management of aeronautic stock whose value is very high, with a view to
bringing it to an acceptable level;
Formulate the policy for the renewal of handling equipment by taking into account a
plan for the reform and standardization of equipment with the aim of achieving the
interchangeability of some equipment ;
Establish an alliance with foreign partners with the view to draw toward the industrial
centers workloads whose cost is competitive based on quality/price;
Put into application the Bank's recommendations regarding cost accounting whose
implementation would reinforce the Company's management capacity.
19
10.3.3 For the Bank
i)
ii)
iii)
iv)
Before approving any modification, adequately assessment the extent of its impacts
on project objectives and overall performance to establish whether the project should
be reconsidered by the Board;
Reinforce the capacity and the frequency of the project supervision missions;
Determine the appropriate expertise for project appraisals and monitoring;
Require from the Borrower and the Executing Agency the timely preparation of
project progress reports and completion reports, in accordance with Bank procedures.
LIST OF ANNEXES
Number of pages
Annex 1
:
Air Afrique Organizational Chart
1
Annex 2
:
Table of Air Afrique's Shareholders
Annex 3
:
Air Afrique Fleet
1
Annex 4
:
Air Afrique's Debt Status
1
Annex 5
:
Project Costs and Financing
1
Annex 6
:
Disbursements Schedule by Sources of Finance
1
Annex 7
:
Summary Table of Modifications
1
Annex 8
:
Summary table of financial trends
1
Annex 9
:
Implementation Performance
Annex 10
:
Bank Performance
1
Annex 11
:
Impact on Development
2
Annex 12
:
Matrix of Recommendations and Follow-up Actions
1
Annex 13
:
Conditions Precedent to First Disbursement
1
1
1
Decentraliszed Functions
Functions Centralized
ORGANIZATIONAL CHART OF AIR AFRIQUE
Annex 1
Annex 2
TABLE OF AIR AFRIQUE SHAREHOLDERS
N°
1.
2.
3.
4.
5.
6.
Total
Shareholders
Eleven Member States (6.40% each)
SPAO/Air France Finances
Agence Française de Développement
BOAD
DHL
Abidjan Catering
Percentage
70.40 %
12.17 %
9.12 %
4.56 %
3.20 %
0.55 %
100.00 %
Annex 3
AIR AFRIQUE FLEET
Ownership
and
Borrowings
Long-term
lease
Variant
Type
Airbus A310300
Airbus A300B4
Airbus A300600R
B 737-300
B707-320 C
DC8-62F
Antonov AN12
In
service
Leased
Out
Leased
in
Activity
4
Passage
3
Passage
From
Repossession by the credit
insurers
2
2
Passage
ILFC
3
1
1
1
3
1
1
1
Passage
Cargo
Convertible
Cargo
2ILFC 1 JAT
World Air
Arrow Air
Chapman
Lease with
AOM
DC 10-30
1
Passage
buy
option
Annex 4
AIR AFRIQUE DEBT STATUS
N°
Amount
(in billion CFAF )
129.30
36.41
0.61
1.18
8.36
0.15
0.48
176.49
Debt
7.
Aircraft Debt
8.
ADB (guaranteed and non-guaranteed)
9.
BDEAC
10.
BOAD
11.
AFD
12.
PROPARCO
13.
CREDIT LYONNAIS
Air Afrique debt status as at 31/12/98




Amount outstanding
Arrears
Late Interest charges
Total
:
:
:
:
125.21
043.33
007.95
176.49
billion CFAF
billion CFAF
billion CFAF
billion CFAF
Annex 5
REAL PROJECT COSTS AND FINANCING
ADB
Air Afrique
Total
Appraisal
CFAF million
BUA million
L.C.
F.E.
Total
L.C.
F.E.
Total
15239
15239
37.60
37.60
1425
2073
3498
3.51
5.10
8.61
1425
17312
18737
3.51
42.70
46.61
Completion
CFAF million
BUA million
L.C.
F.E.
Total
L.C.
F.E.
Total
16179
16179
37.58
37.58
1425
2073
3498
3.51
5.10
8.61
1425
18252
19677
3.51
42.68
46.19
%
81.36
18.64
100.00
Annex 6
DISBURSEMENTS SCHEDULE
BY SOURCES OF FINANCE
(million UA)
ADB
Air Afrique
TOTAL
Percentage
1990
9.04
2.07
11.11
24.06
1991
8.76
2.01
10.77
23.31
1992
16.19
3.71
19.90
43.08
1993
1.84
0.42
2.26
4.90
1994
1.66
0.38
2.04
4.42
TOTAL
37.58
8.61
46.19
100.00
Annex 7
SUMMARY TABLE OF MODIFICATIONS
COMPONENTS
F.E.
Aircraft maintenance
Aircraft Reconfiguration
Stopover Equipment.
Marketing computer
equipment
Computer and office
automation equipment
Training and studies
Aircraft overhauling
Aircraft spare parts
Equipment for industrial centers
Sub-Total
Aircraft Reconfiguration
Sub-Total
Handling equipment
Computerized Registration
System
GAETAN equipment
Alpha III/Pelican equipment
Sub-Total
Marketing computer equipment
Sub-Total
Headquarters' computer
equipment
Decentralized computer
equipment
Office automation equipment
Sub- Total
Training
Studies
Training flight engineers
Sub-Total
Base cost
INITIAL
(in million UA )
L.C.
Total
F.E.
MODIFIED
(in million UA)
L.C.
Total
10.12
2.09
3.64
15.85
4.86
4.86
5.09
0.00
0.00
0.00
0.00
0.07
0.07
0.85
10.12
2.09
3.64
15.85
4.93
4.93
5.94
14.20
6.97
3.59
24.76
0.80
0.80
1.05
0.00
0.00
0.00
0.00
0.00
0.00
6.19
14.20
6.97
3.59
24.76
0.80
0.80
7.24
1.37
0.26
1.63
0.00
0.00
0.00
6.46
1.05
1.05
1.11
0.79
0.79
0.00
0.00
7.57
1.84
1.84
1.48
1.11
3.64
0.28
0.83
7.30
1.76
1.94
10.94
1.37
0.82
2.19
1.51
0.86
2.37
0.63
0.11
0.74
0.00
0.00
0.00
0.89
2.89
5.13
0.37
0.00
5.50
36.61
0.39
1.32
0.00
0.00
0.00
0.00
3.29
1.28
4.21
5.13
0.37
0.00
5.50
39.90
0.89
2.40
0.41
1.27
1.30
3.67
6.06
6.06
37.65
0.00
0.00
8.57
6.06
6.06
46.22
Annex 8
SUMMARY TABLE OF FINANCIAL TRENDS
(in million CFAF)
PKT Traffic
Passenger revenues
Unit/revenues
Other traffic revenue
Sundry revenues
Total revenues
Intermediate consumption
Value added without the
project
Personnel expenses
Other expenses
Total expenses
Net Cash flow
1990
2,400.00
82,295.00
34.29
36,370.00
15,884.00
136,983.29
75,519.00
61,464.29
1991
2,038.00
80,462.00
39.48
34,792.00
16,528.00
133,859.48
71,387.00
62,472.48
1992
2,187.00
88,860.00
40.63
32,172.00
18,550.00
141,809.63
72,613.00
69,196.63
1993
2,219.00
85,147.00
38.37
35,391.00
19,357.00
142,152.37
74,660.00
67,492.37
1994
2,362.00
149,768.00
63.41
63,278.00
29,506.00
244,977.41
125,907.00
119,070.41
1995
2,456.00
153,390.00
62.46
70,573.00
25,903.00
252,384.46
131,952.00
120,432.46
1996
2,472.00
151,289.00
61.20
66,146.00
28,963.00
248,931.20
132,269.00
116,662.20
1997
2,664.00
166,199.00
62.39
73,944.00
43,677.00
286,546.39
139,949.00
146,597.39
14,107.00
36,777.00
126,403.00
6,954.00
15,179.00
36,025.00
122,591.00
9,627.00
17,418.00
34,800.00
124,831.00
11,096.00
17,503.00
39,811.00
131,974.00
2,815.00
20,244.00
66,584.00
212,735.00
18,607.00
23,722.00
73,966.00
229,640.00
6,137.00
25,336.00
73,180.00
230,785.00
3,236.00
24,567.00
78,269.00
242,785.00
25,361.00
Annex 9
FORM #1
IMPLEMENTATION PERFORMANCE
1
2
3
4
EVALUATION CRITERIA RATING
Adherence to implementation schedule
Adherence to costs schedule
Compliance with contractual conditions
Adequate supervision of accounts rendered
5
Satisfactory operations (if any)
6
7
Total
Overall evaluation of implementation performance
RATING
2
3
3
1
3
12
2.4
COMMENTS
The project’s implementation was delayed by 21 months.
The project was implemented within budget limits and had an unspent balance of BUA 23,211
All conditions were fulfilled to comply with loan agreement clauses
Air Afrique only provided 2 project status reports in 4 years and the Bank only carried out one supervision mission
The quality of operations is satisfactory. Orders were respected, the equipment’s specification were in conformity with those spelled
out in the requirements and bidding documents.
The overall assessment is satisfactory
Annex 10
FORM # 2
BANK PERFORMANCE
1
2
3
4
EVALUATION CRITERIA
At identification
At project preparation
At appraisal
At supervision
Overall assessment of Bank performance
RATING
1
1
3
1
1.5
OBSERVATIONS
Did not take part in project identification
Did not take part in project preparation
Project costs were well estimated. However, the Bank did not adequately assess the impact of the modification of components
The Bank’s project monitoring is not satisfactory; only one supervision mission during the entire duration of the project
The overall performance of the Bank is not satisfactory
Annex 11
FORM # 3
IMPACT ON DEVELOPMENT
1.1
EVALUATION CRITERIA RATING
Objectives relevance and
implementation
Macro-economic policy
1.2
Sector policy
2
1.3
Physical implementation (including
production)
3
1.4
Financial policy
3
1.5
Poverty reduction, social and gender
1.6
Environment
1.7
2
Private sector development
Institutional development
Institutional development, including
restructuring
1
2.1
RATING
2.6
2
N/A
3
N/A
2.5
2
2.2
Management and financial information
system (including audit)
2
2.3
Transfer of technology
3
3
Human resources (including turnover
rate, training and counterpart staff)
Sustainability
2.8
3.1
Sustain commitment of the Borrower
2
3.2
Environmental policy
3
3.3
Institutional framework
3
3.4
Technical viability and staff supervision
3
3.5
Financial viability including the cost
recovery system
1
2.4
3. 6
3.7
3.8
Economic viability
Environmental viability
Operation and maintenance availability
of recurrent funds, exchange rate, spare
parts, workshop equipment, etc.
3
2
3
3
COMMENTS
The project has not fully achieved its objectives.
The project is in keeping with the company’s recovery policy.
The implementation of the project, by reinforcing the country’s
capacity, contributes to the promotion of air transport. It also
enables the industrial promotion of the enterprise.
All the project components have been fully implemented. The
maintenance and servicing are carried out comply with the
standards required by the manufacturers and the aeronautical
services.
The operating expenses are very high. The company encounters
difficulties in making the States accept the tariff scales
recommended by IATA and ATAF to enable carriers to balance
their operations.
The project has no significant impact on poverty.
The project did not cause any damage to the environment. Engines
in the airline’s aircraft meet the acoustic norms imposed by ICAO.
The project has no privatization component.
The project needs an institutional support
The restructuring of the company has been envisaged following the
project’s implementation.
The accounting and financial information system is not very
efficient and renders the liquidation of pools difficult. The same
applies to the posting of revenues, thus making it impossible to
analyse the results and determine cost-effectiveness. There is no
cost accounting.
The project made it possible to convert the DC 10 flight engineers
to new types of aircraft at the term of replacement of the fleet.
The technical staff and supervisors master the working tools
acquired under the project and the productivity increased slightly.
The Borrower had difficulties in meeting its deadlines and States
had to give their guarantees to regularise the situation.
The company falls in line with the air transport environment. It is a
result of the cooperation so often recommended by the donors and
decision-makers on African integration. It is also a member of the
major international air transport institutions.
The Executing Agency is competent to ensure the management of
the project.
Equipment and tools delivered are well serviced periodically due to
the norms required in the air transport industry. The staff in place
have the requisite skills to use and maintain this equipment.
Another restructuring plan is underway which will be followed by
privatization
The project has no negative environmental impact.
The company has a stock of spare parts large enough to cover its
needs and pools with other carriers.
4.
Internal rate of return (IRR)
N/A
There was no completion report and therefore no elements for
calculating the IRR.
5.
Overall assessment of impact on
development
2.6
The project has had a satisfactory impact on development.
Annex 12
MATRIX OF RECOMMENDATIONS AND FOLLOW-UP ACTIONS
MAIN OBSERVATIONS
AND CONCLUSIONS
RECOMMENDATIONS

Project Formulation
and Objections: the
project is in keeping
with the company’s
restructuring plan.
Project
implementation:
The project had an
overall time overrun of
21 months
Compliance with
loan conditions:
The general loan
conditions were met
Assessment of the
overall performance:
Financial performance
unsatisfactory
Institutional
performance
inadequate



RESPONSIBILITIES
Financial support ongoing financial
adjustment
Boost competitiveness


Member States
Air Afrique

Take steps to ensure
the rapid start-up of
the project

Pay more attention to
procurement procedures
for specific projects


Air Afrique
The Bank

Familiarize the
project staff with
Bank procedures

Strengthen the training
and retraining capacity of
project staff


Air Afrique
The Bank

Control operating
expenses
Strengthen the
institutional capacity,
the financial structure
and management

Develop the strategy of
alliance with other HUB
companies
Development of
customer loyalty
Improve the aircraft
occupancy rate

Air Afrique
Consolidate the
management and control
systems of the company

Air Afrique


Sustainability :
The sustainability of
most of the outcomes
is uncertain.
Alliances with the
other companies
especially African
airlines
Prepare a plan for the
replacement of
handling services
equipment
FOLLOW-UP ACTIONS
Discuss and study
thoroughly the
sustainability of the
project’s
achievements as a
section in the
appraisal report



Annex 13
CONDITIONS PRECEDENT TO FIRST DISBURSEMENT
It was recommended to grant Air Afrique Multinational Company a loan not
exceeding UA 37.60 million, with the joint guaranty of the Republic of Côte d'Ivoire and the
Republic of Senegal, subject to the following conditions :
A)
Conditions precedent to first disbursement
Prior to first disbursement, the multinational Air Afrique Company shall :
i)
vii)
Undertake to prepare and transmit to the Bank, later than December 1990, the
Company's industrial policy as well as the full and detailed study of the extension of
the industrial centers;
Show evidence of the rescheduling of the consolidated debt;
Undertake to submit to the Bank its fleet plan in terms of modules, within 6 months
starting from the date of the loan agreement signature;
Show evidence of full payment, by the company's shareholders of the 1979 capital
increase, as well as evidence of full payment of the advance on the current account as
decided under the Company's 1989 Recovery Plan;
Show evidence of the creation of the project implementation follow-up committee
which will be attached to the headquarters. This committee will be made up of the
heads of the various departments;
Show evidence of the appointment of the Coordinator of the Implementation
monitoring committee;
Undertake to adopt the Company's staff regulations not later than 31 December 1990.
B)
Other Conditions
ii)
iii)
iv)
v)
vi)
Air Afrique shall in addition :
i)
ii)
Submit to the Bank for notification, every year starting from the 1991 financial year,
its budget estimates for the coming year before the end of the on-going financial year;
Extend the terms of reference of the external auditors to cover all aspects of external
auditing.