Airline Operators Ask FG For Bailout

The Chief Executive Officer (CEO), Arik Airline, Chris Ndulue, who led the movement told the Senate that a special intervention fund if given, will assist the airlines remain afloat.

The demand was made at an emergency interactive session with the Senate Committee on Aviation.

Speaking on behalf of the operators, Chris Ndulue who said the economic environment in which they are operating has moved from bad to worse, called to proffer quick solutions to the crisis bedeviling the sector.

“The economic situation as it is today is suffocating us out of operation”, he said.

According to him, apart from Aero Contractors and one other presently under distress, two other airlines may follow if urgent intervention is not made by the government directly to the aviation sector.

He listed high interest rate of 24 percent on bank loans, worsening exchange rate of the naira to the dollar and multiple charges from various regulatory agencies as problems running them out of operation.

He said, “There are a lot of economic indicators that have made business more difficult, which are now manifesting in the inability 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 percent, and you don’t make a margin of 24 percent, it means that you will find it very difficult to 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 (CBN) 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 trickledown 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.”

He told the committee of the necessity to collaborate with the Federal Government in working out plans of rescuing Aero Contractors back into operation, saying allowing the airline to get out of operation completely will serve as bad signal to others having being in business since 59 years ago.

Captain Muktar Usman, the Director General of Nigerian Civil Aviation Authority (NCAA), however, assured the committee that the Federal Government was already taking steps to remedy the situation.