FG Under Pressure To Rescue Airlines

• Mulls Bailout Funds With Low Interest Rates, Others

The Federal Government is under immense pressure to rescue Nigerian carriers from extinction, as it weighs options that would allow the airlines remain afloat. Woleshadare.net learnt that the Minister of State for Aviation, Hadi Sirika, is tinkering with many options.
Among such options is to write a memo to President Muhammadu Buhari on the need to offer fresh bail out to the carriers. But this option seems not to be popular with stakeholders in the aviation industry who felt disappointed that the over N180 billion given to the airlines some seven years ago was not judiciously utilised by the carriers.
Aero Contractors, which the Assets Management Corporation (AMCON) had taken over 60 per cent of its equity, owes N30 billion and Air Nigeria, N35 billion, as intervention fund collected by the management of the airline, which has been declared bankrupt and stopped operations, while IRS Airlines was said to have received N9.4 billion.
Chanchangi Airlines got N9.4 billion, while Arik also benefited an undisclosed amount, suspected to be in the region of N40 billion. It was also learnt that government could be meeting with commercial bank in the country with the need to cut interest rate for carriers, which are held down by high interest rates.
Banks’ interest rates are in double digits even before inflation climbed to 17 per cent per annum, making it extremely difficult for them to repay loans.
A source close to the Ministry of Transportation, who spoke on condition of anonymity because he was not authorised to speak, said the Federal Government was poised to reposition the aviation industry and ensure that airlines’ challenges are ameliorated.
The source further hinted that based on that, Sirika has met with various groups in the sector, especially airline operators, on how to revive their fortunes.

Early this year, precisely in March, airline owners met with the Federal Government with the aim of cushioning the effect on the sector.
The operators, under the aegis of Airline Operators of Nigeria (AON), noted that air fares have remained constant or reduced despite the weakness of naira against the dollars and pound sterling. According to them, despite the odds, the carriers still provide safe operations.
They said that if the situation was not urgently tackled, it could lead to insolvency as most of the airlines were wobbling with signs that they could find it difficult to survive this year.
In Nigeria, compared to other nations, domestic air travel is considered ridiculously low, a situation that has adversely led to the extinction of many carriers. For the past few months, the naira has weakened and exchanged at N436 against the dollar last Thursday.
President of Airline Operators of Nigeria (AON) Capt. Noggie Meggison, lamented that foreign exchange was very difficult to assess, considering that airline operations are dollarised.
He noted: “We have met the Central Bank of Nigeria (CBN). They promised to give us priority. Aviation fuel takes 60 per cent of airline operations. The cost of running our operation is very high. We have met them on how government can come in to cushion the effect of sliding naira.
It is definitely going to be a tough ride for the sector because of falling oil price.” The aviation sector has remained unattractive to most Nigerian banks, as loan requests by major operators are hardly considered.
Airlines, which are the major beneficiaries of government’s funds, are also the worst hit by the current banks’ apathy to financing activities in the industry, as aircraft, which they hitherto present as collaterals for loans are no longer accepted by the financial institutions.

Wole Shadare