Nigerian airlines not financially healthy-Minister

• NCAA begins audit, carriers may recapitalise

The Nigerian Civil Aviation Authority of Nigeria (NCAA) has commenced the audit of airlines in the country as there are palpable fears that some of them may be found short of passing the stiff regulatory test.

The audit became necessary with a view to knowing the financial strength of the carrier and to quickly raise the red flag to their operations wherever they are found wanting.

Minister of State for Aviation, Hadi made the disclosure today while fielding question from reporters at the domestic wing of the Murtala Muhammed Airport, Lagos.

The Minister however gave a glimpse of the precarious situation of Nigerian carriers, hinting that the result of the exercise may shock the public. He added that he was sure it is nothing they want to go the press with.

A source who spoke to Woleshadare.net on condition of anonymity because he was not authorised to speak to the media, said the aviation regulatory body may take a far reaching decision backed by the Ministry of Transportation to raise airlines’ recapitalisation far above what it is today.

The first airline recapitalisation was done in 2007. The estimated capitalisation was made up of the cost of leasing of aircraft and other assets such as offices, spare parts, technical staff, among others, which translate into N500 million.

For operators going for intercontinental operations, a minimum of two B767-300 aircraft or its equivalent with the cost of leasing aircraft and other assets which translate into N2 billion.

Sirika further lamented the health of the airlines, saying, “They are owing all over the place”.

His words, “ I am not sure they are financially healthy. NCAA to my knowledge are conducting audit round the airlines at the moment and I am sure the result is not something we want to go the press with. They refused to grow and the challenges are not government caused. It is their own making. I am going to say that you should kindly come. Very soon, there will be a stakeholders meeting where themselves will be present”.

He explained that the stakeholders’ meeting would afford him and the carriers to dialogue on the situation they found themselves.

He stated that he would have them to get their acts together to focus, to re-organise, re-engineer and take advantage and be futuristic.

“They need to look at the bigger picture and bigger pie and organise themselves to take advantage of SAATM rather than to seat here and the train is moving”, he added.

On the huge debts owed by airline, the Minister disclosed that a particular airline owes one of the agencies N13 billion, adding that another airline had its operations grounded as a result of debts running into over N500 billion which necessitated the Asset Management Corporation of Nigeria (AMCON) taking it over.

He however assured that no airline would be allowed to pile up debts again because of the belief that the debts could be written off because of people airline operators know at the corridor of power.

 “Since it is over time and it was in those years of impunity that must be changed. Those things were allowed but under this administration, it is not going to happen at all to allow them to continue to owe debts and someone allows the debts to be waved off. No airline can call the Villa. There is no door or window that is opened in the villa for any entrepreneur to break the law and go there and get it resolved. He cannot come to the office of the Minister of DG NCAA with unclean hands to get anything resolved”.

 He was particularly disappointed with Aero Contractors which has been in operations for over 57 years.

“I was born to stand up to see the name Aero Contractors. It pre dates me as Minister of Aviation and they were getting it right for more than 40 years but suddenly changed their model. They used to service the oil and gas through helicopter charter and contracts. They changed that business model and began to do passenger scheduled flights without changing the business model to reflect their new situation”.

“They ran into trouble. The legacy family ofcourse did what they did and the airline went aground. Government took over, they put management in place, and we told them the direction to go back to the core business. They went back. Just recently, they conducted a C-check on a B737 and the B737 is now flying. They save cost and they are making money. I think it is getting their priorities right and doing the business model that will bring money for them. Everybody wants to run into schedule flight”.

Wole Shadare