Nigeria Air sets for launch with three airplanes, Ethiopian Airlines to own 49% stake, FG 5%

• SAHCOL, MRS, NSF owner consortium

The floating of a national airline for Nigeria would after all materialize as the carrier Nigeria Air, is well on its way to being launched with three Boeing 737-800 aircraft said to be suitable for the Nigerian market.

Spokesman for the Minister of Aviation, Dr. James Odaudu in a statement late yesterday night said the carrier would launch a shuttle service between Abuja and Lagos to establish a new comfortable, reliable and affordable travel between these two major Nigerian Airports, stressing that other domestic destination would follow thereafter.

Odaudu disclosed that the Request for Proposal (RFP) under the PPP act, governed by ICRC, is completed, hinting that after a careful, detailed, and ICRC-governed selection process, Ethiopian Airlines (ET) Consortium has been selected as the preferred bidder, offering an owner consortium of three Nigerian investors, MRS, Skyway Aviation Handling Company Plc and the Nigerian Sovereign Fund (46%), FGN owning 5% and ET 49%.

The consortium, he further stated has been subject to a due diligence process, after which the contract will be negotiated between the consortium and the Federal Government leading to a Full Business Case, which he noted would be expected to be approved Federal Executive Council (FEC).  According to him, the process would take between six and eight weeks.

He reiterated that an interim executive team of highly skilled aviation experts had been working since February 2022 to set up all the necessary regulatory and industry requirements to launch the national carrier.

His words, “All executives have been approved by NCAA, the Air Transport License has been issued by NCAA, Nigeria Air (after having identified the first three aircraft) will now finalize all necessary Operation Manuals and then go through the inspection and approval process of NCAA”.

“The money spent for the launch of Nigeria Air, for all the requirements to establish an AOC and be admitted starting an airline operation, is well within the 5% capital investment of the Federal Government of Nigeria, that will be overall needed to establish the national carrier initially for the AOC approval and everything else required by stringent national aviation regulations, as prescribed in the Federal Executive Council (FEC) approved Outline Business Case (OBC).

“This OBC is the milestone for the preferred Bidder Consortium and has been met by the submitted business plan of the preferred bidder. It is the overall share capital of around 300 Mio USD, provided by the preferred bidder that will launch Nigeria Air to its full size of 30 aircraft and international operation within the next two years. No further FGN funding will be provided above the 5% share capital of the next national Carrier of Nigeria, which was provided to launch Nigeria Air”, he added.

It would be recalled that the invitation to bid for the ownership of Nigeria Air under the PPP regulations of the Federal Government and overseen by the Infrastructure Concession Regulatory Commission (ICRC) was published in the Economist and in several local Nigerian papers on  March 5, 2022, with a deadline for the Request for Proposal (RFP) set for May 10th, 2022, later extended to  June 10th, 2022, with another publication in the Nigerian local papers.

A data room for all the details of Nigeria Air, including the Outline Business Case (OBC) and the financial model, was established by the Transaction Advisor on 15^th March 2022. This data room is a reflection of how transparent the PPP process and the RFP procedure were handled.

A bidders conference was held online on  March 28th, 2022 with over 100 participants.

Over 60 parties requested access to the data room. On June 10, 2022, the Ministry received on time one closed bid from the Ethiopian Airline Consortium. A few others attempted to submit but unfortunately could not meet the deadline. Since we did not collect the bids, we are not in a position to say who they are.

The Evaluation Team, 11 Experts from ICRC, FMFB&NP, FMA, and the TA met on the 20/21^st of July 2022 and again on August 1, 2022.

The Ethiopian Airline Consortium bid was formally opened in the presence of a representation of Ethiopian Airlines, checking that all envelopes were closed and sealed at that point, 11 am on 20^th July, starting with the Technical Bid. The Financial Bid was opened, again under the observation of the Ethiopian representative, on 21^st July 2022.

All 10 forms, as required by the RFP, were evaluated by the team. Unanimously, the assessment team cleared the Technical Bid, which had a total score of 89% out of 100.

In a further meeting on  August 1, 2022, the team assessed the Financial Bid further and graded it with a score of 15% out of 20.

The Ethiopian Airline Consortiumgot a combined score (Technical and Financial Bid) of 86.7%.

Ethiopian Airline Consortium was declared the Preferred Bidder and the evaluation Team will proceed with the

Due Diligence Phase (completed for all consortium partners on 15 Sep. 2022) Contract negotiation between the Preferred Bidder and the Federal Government.

The interim Executive Team has been working since 1 Feb. 2022 on establishing Nigeria Air to prepare the necessary documents and requirements for achieving the Air Transportation License (ATL), Air Operator Certificate(AOC) and launch the operation, before handing it over to the successful PPP bidder consortium.

All interim Executives were approved by NCAA after individual interviews (Accountable and Postholders/Nominated persons) in May 2022.

The ATL was awarded to Nigeria Air by NCAA on 6^th June 2022.  Three aircraft were searched for by the interim Executive experts and several offers were evaluated, from highly experienced and competent operators.

The contract was negotiated with three final candidates, and a signature-ready contract has been finalized with Ethiopian Airlines for three Boeing 737-800 with a 16 Business Class and 150 Economy Class configuration.

Wole Shadare