Arline operators beg FG for bailout‎

Airline operators in Nigeria on Wednesday begged the Federal government to make provision for their bailout in order to avert imminent collapse of the business
The operators made the demand at the emergency interactive session held with the Senate Committee on Aviation.
The operators solicited for a Special Intervention Fund in order to remain in business‎
Speaking on behalf of the operators under the aegis of the Airline Operators Association of Nigeria, the Chief Executive Officer of Arik Airline, Chris Ndulue, said the economic environment in which they are operating has moved from bad to worse.
Ndulue said: “The economic situation as it is today is suffocating us out of operation.”
According to him, apart from Aero Contractor Airline and FirstNation presently in distress, two other airlines may follow if urgent intervention is not made by the government in the form of Special Intervention Fund directly to the Aviation Sector.
He listed high interest rate of 24 per cent on bank loans, worsening exchange rate of Naira to Dollar and multiple charges from various regulatory agencies as problems running them out of operation.
Ndulue said: “There are a lot of economic indicators that have made business more difficult, which are now manifesting in the ability of the airlines to continue to operate.
“There are many problems – so many problems.
“We are operating in an industry that has very little (profit) margin.
“For a start, if you have to borrow money and you have to pay 24 per cent and you don’t make a margin of 24 per cent, it means that you will find it very difficult pay back the debt.
“And there is a limit to what you can do in terms of being able to manage the debt.
“These fundamentals are the things we need to address.
“The last time we were here (at the Senate), the Central Bank of Nigeria was here too and it was the CBN that made it clear to everybody that the intervention fund earlier granted was not for the airlines.
“In effect, what this meant was that the loans we took from some banks were transferred to the Bank of Industry and there was a reduction in the interest rate.
“To that extent, there was a little trickle down effect on the airlines.
“But, there hasn’t been a bailout targeted at salvaging the airlines or addressing the finances of the airlines.
“I think that is where the committee could assist us by interfacing on our behalf with the Federal Government.
“The airlines did not get as much as they wanted in the first place, even for that little reduction in the interest rate.
“But now, the economic situation has moved from being bad to worse.
“I think the intervention needs to take place to avoid total collapse of the industry.
“Two airlines have closed shop.
“There could be more airlines if the trend continues.”
Ndulue added by telling the committee to collaborate with the Federal Government in working out plans to rescue Aero Contractors, adding that allowing the airline to get out of operation completely will serve as bad signal to others having been in business for 59 years.
The Director General of the Nigerian Civil Aviation Authority, Captain Muktar Usman, however assured the committee that the Federal Government was already taking steps to remedy the situation.
Apart from Ndulue, the CEOs of Aero Contractor and First Nation Airlines were also at the emergency session.