Air Africa

…Welcome to the future

A Truly Pan
African
Network
From the
West Coast
Further Make The World A More Connected Place
 The Vision
Launch Air Africa, a Nigeria-based airline that will profitably
build a strong and customer-oriented Pan-African network
From The Western Part Of The Continent
Nigeria
Provides A
Strategic &
Profitable
Launchpad
(Both Short &
Long Term)

One Of The MINT Countries Identified By Goldman Sachs

Second Largest Economy On The African Continent
480
446

398
400

320

240

160 141
104
79
80 62 60
48 41 40

Source: IHS Global Insight Report, February 2014

Nigeria Set To Become The Largest Economy By 2020

Growing Middle Class Who Can Afford To Fly

 According to Africa Development Bank, roughly 20% of Nigeria’s population can be defined
as true middle class (earning > $10,000/year) with that number expected to double over the
next two decades

 That’s twice what it was about 20 years ago

 Major global retail and leisure brands are pursuing plans to set up locations in Lagos & Abuja

Source: http://www.uhy.com/the-worlds-fastest-growing-middle-class/; Africa Development Bank

Existing Key Relationships
Major Global Firms Are Doubling Down In Nigeria
Telecommunication Was A Big Hit, Power &
Aviation Sectors Are Next
 There are currently 110 million subscribers in the country – that number is >1000% what it
was 15 years ago. I can personally attest to this - no kidding!

 Vodacom passed on the opportunity and its arch rival on the continent, MTN, became a
distant first on the continent because of Nigeria*

 Power sector has already been privatized late last year and the government is spending
money on refurbishing major airports

Source: http://www.budde.com.au/Research/Nigeria-Mobile-Market-Overview-Statistics-and-Forecasts.html
* http://financialnigeria.com/NEWS/news_item_detail_archive.aspx?item=2379
Strong Growth In The Domestic Aviation Sector (Passengers)
$MM
3,600
3,294

3,000 2,915

2,579

2,400 2,283
2,020
1,788
1,800
1,582
1,400
1,218
1,200 1,060
922

600

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Airport data; conversation with inside experts

Domestic Size Expected To More Than Double In Size By 2020

Tourism Within The Country Is Currently
Non-Existent
 We estimate that to be somewhere between $600MM - $1 billion
Great Opportunity For Cargo Business

 Poor roads and rail facilities means cargo would be a strong source of revenue (our model
is predicting at least 10% of passenger revenue)
Top 10 Routes In Nigeria

Lagos – Abuja
Lagos – Port Harcourt
Abuja – Port Harcourt
Lagos – Kano
Lagos – Benin
Lagos – Owerri
Lagos – Enugu
Lagos – Osubi
Abuja – Enugu
Lagos - Calabar

Source: Airport Data; conversation with Airbus expert in West Africa

We Plan To
Start With A
Triangle
Network
(3 A319s)

Lagos Is The Financial Hub, Abuja Serves As The Seat Of Power

While Port Harcourt Is Home To Major Oil Players
How Big Is The Pan African* Market?

Our market analysis estimates the market size to be

~$8.5billion**

With 5% Y-o-Y growth, the market is expected to be

north of $14.5billion** by 2025
*Pan Africa is defined by a point to point journey in Africa that involved at least two African nations

**Please see the attached excel file for the calculation

 Our 10-Year Route Plan*
Number of Jets 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Lagos - Abuja 2 3 4 4 4 4 4 4 4 4 4
Lagos - Port Harcourt 1 2 3 4 4 4 4 4 4 4 4
West African Corridor 0 1 1 2 2 2 2 2 4 4 4
Lagos - Johannesburg 0 0 2 2 2 4 4 4 6 6 6
Lagos - Addis Ababa 0 0 2 2 2 2 2 2 2 2 2
Lagos - Nairobi 0 0 2 2 2 2 2 2 2 2 2
Lagos - Cairo 0 0 0 2 2 2 2 2 2 2 2
Lagos - Dar es salaam 0 0 0 1 1 1 2 2 2 2 2
Lagos - Maputo 0 0 0 1 1 1 2 2 2 2 2
Lagos - Luanda 0 0 0 1 1 1 2 2 2 2 2
Lagos - Lusaka 0 0 0 1 1 1 2 2 2 2 2
Lagos - Mauritius 0 0 0 0 1 1 1 2 2 2 2
Lagos - Seychelles 0 0 0 0 1 1 1 2 2 2 2
Lagos - Capetown 0 0 0 0 1 1 1 2 2 2 2
Lagos - Kigali 0 0 0 0 1 1 1 2 2 2 2
Lagos - Cassablanca 0 0 0 0 1 1 1 2 2 2 2
Lagos - Tunis 0 0 0 0 0 1 1 2 2 2 2
Lagos - Harare 0 0 0 0 0 1 1 2 2 2 2
Lagos - Durban 0 0 0 0 0 1 1 2 2 2 2
Lagos - Tripoli 0 0 0 0 0 1 1 2 2 2 2
Total Aircrafts in service 3 6 14 22 27 33 37 46 50 50 50

*based on Nigeria’s aviation traffic and current ranking of African markets by destination as derived from MIDT &
conversations with industry experts
Let’s Talk Numbers
10-Year Income Statement Projection
To Show In Person
10-Year Cash Flow Statement Projection
To Show In Person
Current Valuation Of The Business
To Show In Person
Initial Needed Start-up Capital
To Show In Person
How About Competition?
 Market Share Breakdown (2012)

5.0%

Nigerian Commercial
20.0%

Arik
Aviation Sector Is Dominated Aero
75.0%
By Only One Airline – Arik Air Dana

 Preliminary research shows that Arik Airline has a terrible record on customer service and
punctuality even when scheduling is within the company’s control
 Over 50% of Arik flyers randomly interviewed would readily jump ship if only they had another option.
While this is not conclusive in itself, it seems to suggest that a new carrier would likely be positively
received by the market

 Aero is currently in government conservatorship because of massive debt caused by poor

management

Source: Airbus estimates / Sabre MIDT

 How Is Arik Air Going To Respond?

 First, there is currently under-capacity on the two routes we are launching with
(Lagos-Abuja & Lagos-Port Harcourt

 Arik Air could drop its fare but our model currently has a 30% lower fare

 Dropping fares by Arik would further exacerbate its financial woes as the airline is currently hurting
badly; rumors has it that the airline is actually currently under lifeline support by the government

 If we are backed by a major carrier, another global airline (especially from

SkyTeam & Star Alliance) could buy some stake in Arik Air as a way respond to the
competition and keep Lagos (as a potential strategic hub) in play

 However, Arik Air is family controlled which could be a major deterrence to any prospective buyer

 Arik Air is in a major financial situation which would make a prospective backer think twice

 Current management team does not enjoy a great reputation though that could be overhauled by a
prospective buyer as part of the terms of a potential transaction
 At The Continent Level, West Africa Currently
Lacks A Strong Internationally Credible Carrier

Asky, another
carrier based in
Lome, Togo
serves primarily
as a feeder to ?
Ethiopian Airlines

Source: www.nationsonline.org
There Will Be Competition From The
“Group Of Four” Especially To Their
Respective Home Markets…
 However…
 All fares used in our model for Pan African routes are at least 20% below the
current offering in the market

 Our base in Nigeria gives us a great advantage

 Most populous country in Africa with ~177MM people; this should bode well for local traffic

 Nigeria is one of the top two largest economies on the continent (with South Africa)

 We also plan to drive traffic by marketing Africa to the Americas and our location
on the western coast gives us a better strategic location advantage

 Our business model includes an in-house tourism expert who will work on
identifying attractions across the continent that we can offer as a package

 Please see the section on “What Sets Us Apart” for more detail
What Sets
Us Apart?
Our Pan African Story
 In-House Tourism Expert
 Already identified names of people that could potentially serve as VP of Tourism
Pursuing Relationships With
Some Major Global Carriers
Laser Focus On
Customer Service
Marketing Messages That Capture
The General Sentiment Of Hope
And Future Growth
A World Class Management Team
And Superior Board Of Directors
Potential Management Team
 Kenji Hashimoto
Former President, American
Airlines Cargo Group

Kenji was the former President of the Cargo Division at American Airlines.
Under his leadership, the division ramped up its contribution to the
financial performance of the firm and was recognized multiple times for
excellence by the industry. Prior to this role, he led global alliances,
international planning activities, interline product distribution, regulatory
affairs, and oversaw Joint Business Agreement activities for the firm

Kenji earned a Master's Degree in Business Administration from the Kellogg

School of Management at Northwestern University and a Bachelor's Degree
in Physics from Harvey Mudd College
 Virasb Vahidi
Former Executive Vice-President,
American Airlines

Virasb served as the Chief Commercial Officer and Executive Vice

President of American Airlines prior to its merger with US Airways in 2013.
In these roles, he oversaw sales, marketing, alliances, revenue
management, and was a principal architect in restructuring and expanding
the reach of American Airlines’ global network with its oneworld
partnerships. Virasb and his team were also credited for creating the first
renewal of American Airlines’ brand in 40 years

Virasb earned a Bachelor of Science degree in Applied Mechanics and

Engineering Sciences from the University of California – San Diego and an
MBA at ENPC MBA Paris - School of International Management
 Babawande I. Afolabi
Founder & CEO, Green White Group

Babawande is the founder & CEO of Green White Group, the parent
company for the proposed new airline, “Air Africa”. Babawande is
currently a second year MBA student at the Stanford Graduate School of
Business. Prior to business school, he worked as an investment banking
analyst at Morgan Stanley in New York and London covering multiple
industries including the global commercial aviation industry

Babawande obtained his bachelor’s degree at Illinois Wesleyan University

in Bloomington, IL. He was elected student body president in college and
currently serves on the leadership team for the premier Dean’s Speaker
Series, “View From The Top” at Stanford Business School
 Kenny Awosika
Co-founder of Green White Group

Kenny Awosika is the co-founder of Green White Group he brings to Air Africa an
enthusiastic and optimistic business approach. Kenny worked for the Headquarters
Department of the Army (DoD) where he served in many duties such as Deputy
Operations Manager, Project Manager, and Security Specialist. At the State
Department, Kenny worked for the Secretary of State’s office and the Information
Resource Management (IRM). He is currently an Executive Level Project Analyst
within IRM and a Chief Information Officer (CIO) of and Information Technology
consulting business startup, Executive Consults LLC.

He holds a Bachelor degree in Computer Information Systems from Indiana

University and a Masters degree in Management information Systems from George
Washington University.
 Seun Salami
Senior Manager, Deloitte

Seun is a senior manager at Deloitte & Touche. He specializes in assisting

senior executives and audit committees of Fortune 500 companies in the
Insurance and Oil & Gas industries. Prior to joining Deloitte, he was an
Associate with KPMG

Seun in a certified public accountant and he obtained his masters in

Finance and Economics from Ohio University
 Kayode Ogunro
Portfolio Manager, Nigeria
Sovereign Investment Authority

Kayode is a special advisor to the minister of Finance and is responsible for

private sector investment and assisting with the setup of the Nigeria
Sovereign Investment Authority

He obtained his Bachelor’s degree from Harvard University and an MBA

from Harvard Business School
 Why Should
American Airlines
Invest?
 This Will Be Both A Great
Investment And Network Play
With A Local Partner, American Can
Touch Multiple African Destinations

American potentially puts a plane on JFK –

Lagos route sometime between 2016 and 2017
 Africa Is Largely A Greenfield For Tourism
Travel From The United States And We Plan
To Aggressively Tap Into This Market
Middle East &
Africa
9.0%
Latin America
14.0%
Europe
36.0%
We will GROW this market by
developing curated attractions that we
Caribbean can market to an American tourist
24.0%
Asia / Pacific
Also worthy of note - Africa is
21.0%
gradually becoming top of mind for the
average American. With a targeted and
well-executed plan, we can capture this
evolving trend

Source: National Travel & Tourism Office, International Trade Administration, U.S. Department of Commerce (February 2014)
 American – The Airline Of Firsts
 Worked with Donald Douglas to develop DC-3 and first airline to fly the “Flagship”
aircraft in 1936

 As a result, American became the first airline to make profit solely from carrying
passengers without the US Mail

 First to co-operate with Fiorello LaGuardia in 1937 to build an airport in New York and
became owner of the world’s first airline lounge at the airport

 Partnered with IBM in 1960 to launch SABRE, the world’s largest electronic data
processing system for business use

 Only one of the two US carriers allowed to serve London Heathrow due to the strategic
purchase of TWA assets in 1990 (until open skies agreement kicked off in 2008)

 First US carrier to take strategic interest in Latin America a couple of decades ago – a
move that today makes American an incredibly dominating player on the continent

 By investing in and partnering with Air Africa, American Airlines will become the first US
carrier to develop a truly long-term comprehensive Africa strategy
Source: Wikipedia - http://en.wikipedia.org/wiki/American_Airlines; AA website, conversations with current employees
A Winning Long-term Comprehensive
Strategy That Will Give American An Edge
Over Its Competition In Africa

A Couple Of Decades From Now,

This Could Be Latin America 2.0
Risk Factors
 Competition
 We expect some initial strong response from Arik Air, the current de facto monopoly
in the Nigeria’s aviation industry. However, as long as we diligently execute our
business plan and stand by our overarching mission, we are confident that
customers will find tremendous value in our points of differentiation. Also it’s
worth noting that Arik Air is currently in a poor financial state and doesn’t enjoy
much customer loyalty

 On the continental level, we expect competition from Ethiopian Airlines, Egypt Air,
Kenya Airways, and South African Airways especially on routes that overlap with
their respective home markets. Nevertheless, we expect the size and location of
our home base to give us a huge strategic advantage
 Potential Higher Fuel Cost
 Our model is using a fuel spot price that is ~10% higher
 Political Risk
 We are proactively working and receiving guidance from former senior political
figures who are very connected, incredibly progressive, internationally respected
and pro free market on how to navigate the political environment with integrity

 We also plan to appoint 1-2 of these former senior political leaders to our Board of
Directors so we can continue to benefit from their wealth of experience both on
the national and global stage
 Infrastructure Risk
 Nigeria has a lot of work to do in bringing its national airports to global standards.
Nevertheless, the airports are still working and receive multiple daily arrivals from
some of the biggest names in the global aviation industry including British Airways,
Delta, Lufthansa, Emirates, Etihad, United & Virgin Atlantic (just to mention a few)

 Meanwhile, given our long-term and global ambition, we have concrete plans to help
lead the conversation on building a 21st century airport. We hope to be the American,
British Airways, Delta and Lufthansa of Nigeria by helping to transform Lagos into a
respectable home for us and a major hub for the global aviation industry
 Availability Of Quality Labor
 Skilled labor in Nigeria’s aviation industry is not available in abundance when
compared to global standards. However, this shouldn’t be a problem in the short
term since we are starting with only 3 jets

 Also, we have made reservation in our financial model for a start-up training cost
for the people we will be bringing onboard. We plan to institute a system that will
motivate the initial group of employees to continue training subsequent hires

 In preparation for the future, we have plans to build relationships with

independent professional expatriates who will help train new talents

 If ever needed, we can hire employees from outside of the country

 Execution Risk
 As with most businesses, ultimately what separates the winners from losers is
painstaking execution. This is especially true for a start-up business in commercial
aviation, one of the most complex industries out there. We will be religiously
fanatic about recruiting the best professionals that we can get who have a track
record for not only setting business strategies but also thoroughly seeing initiatives
through completion

 We believe in the mantra – “plan the work, and work the plan” and we will inspect
what we expect. Success will be defined in measurable benchmarks and those
benchmarks will be consistently monitored and appropriately incentivized
Appendix
 Commercial Aviation Is Rapidly
Growing Within Africa

Intra Africa traffic

grew by 93% between
Intra Africa
+93% 2001-2011 and it’s
estimated to continue
growing at least by 7%
and as high as 10%
year over year in the
next two decades

~20MM passengers
travelled between at
least two African
nations in 2012

Source: Airbus Global Market Forecast (2013-2031 Booklet); SABRE MIDT

 Global Traffic To Africa
Continues To Show Solid Growth

CIS (incl. Russia)

+584%
Europe
+50%
North America
+77%
Middle East
+300%

Intra Africa
+93%
Asia Pacific
+126%

Latin America
+149%

External interest in Africa also continues to

show strong growth. Direct traffic to and from
the Middle East grew by 300% in the last decade

Source: Airbus Global Market Forecast (2013-2031 Booklet)

 Oneworld Is The Only Alliance
Without Any Local African Carrier

While Oneworld has non-

stop service major African
cities, having a local carrier
Of all the 3 major alliances, only Oneworld has no
that can cover much
local African carrier as a full member. While
smaller locations would
British Airways has relationship with Comair
help optimize the airline’s
(Kulula), service is limited to Southern Africa
Africa strategy
Source: Based on Oneworld Alliance Membership – www.oneworldalliance.com
Between Late April – Early May, 2014 August - October, 2014 January - March, 2015

Officially announce to the media that a new African Commence a thorough on-the-field marketing research All key officers report to duty; set a firm
airline is coming onboard with plans to commence to better understand our customers, key corporate training timetable for our flight and cabin
service in the summer of 2015; the 14 month window accounts to pursue, key agencies to build relationships crew (this might involve a trip abroad to a
should give us enough time to navigate government with, etc; continue to diligently follow up with our third party, or we could bring a consultant in);
bureaucracy, acquire necessary permits and licenses, ATL applications; start recruiting for other roles that publicly announce a firm date and destination
sign aircraft leases, recruit key personnel, launch a will become needed come January, 2015 for our maiden flight
thoughtful and well-targeted marketing campaign, etc

The Road Ahead…

May- July, 2014 October - December, 2014
Conduct an extensive search process for and hire key Continue working on the ATL; keep refining our
senior management officers, and other cornerstone marketing research; conduct a search and recruit our first
personnel; move to a physical office that will serve as our set of pilots and cabin crew; start getting more firm on
base of pre-launch operations; initialize formal which routes we are launching first and how we plan to
conversation with ILFC and/or other lessors of interest; go about launching them; perhaps start installing key
engage in conversation with the Nigerian government tools such as MIDT, Sabre, PRISM; firm up plans and
and relevant regulatory authorities; submit the Air possibly sign aircraft leasing agreement for delivery in
Transport License (ATL) application 2015 (most likely 3 A319s)
 The Road Ahead… (cont’d)
Sunday, July 5th, 2015
“Air Africa”
Takes to the Sky

Welcome to the Future…

March - June, 2015

Since it would have now been 7 months that we submitted the ATL application, hopefully it
should be ready by now; submit an AOC for our 3 aircrafts; purchase the necessary aviation
insurance; host an official internal launch party; sign third-party agreement for baggage
handling (if we are not doing this internally); load our first fares into Sabre or any other
reservation system we might have chosen; launch an aggressive marketing campaign
knocking on corporate accounts and key agencies; acquire landing slots for projected
destinations; introduce what our cabin crew is going to look like to the public
We Hope You Also Believe in This Vision…

“Throughout the centuries, there were men who

took first steps, down new roads, armed with
nothing but their own vision…”
Ayn Rand

Air Africa
…welcome to the future