Home / Analysis / Fear heightens as Aero Contractors, others near collapse
Aero Contractors on the tarmac

Fear heightens as Aero Contractors, others near collapse

THE ranks of Nigerian airlines are gradually depleting with the recent announcement that Aero; the country’s oldest carrier might soon be going under because of an estimated debt of $200m (about N30bn).
If this information is anything to go by, then by the year 2020:20 when the country hopes to be among the top twenty economies in the world, there may be no airlines to fly the thousands of passengers around the 22 airports scattered across the country.
This alarming scenario currently playing itself out in the Nigerian aviation sector has, in the past ten years, claimed almost 14 airlines including such bigwigs as Bellview, Afrijet, ADC, Okada, Sosoliso, Albarka, Cargo, Nigeria Airways, Dasaab, Space Air, Capital Airlines, Slok, Oriental Airlines, Nicon Airways, Okada Air and a host of others.
In the recent case of Aero, Managing Director, Mr. Shaf Syed, through an email, said that the airline has been locked in discussions with its bankers (Oceanic Bank) for some months now stating that it has now reached a point where it is difficult for Aero to operate on these terms.
He said that the debt owed Oceanic was historical debt and both management teams at Oceanic Bank and Aero have been in constant dialogue about it for the previous six months; however, they have been unable to agree on a resolution that will allow Aero to continue trading as a going concern.
The airline CEO said that the bank took a unilateral decision of freezing its account on the morning of Friday April 23, 2010, which has effectively prevented Aero from paying her suppliers and lessors (including the Canadian Helicopter Company).
Like other airlines, Aero has taken their plight to the Minister of Aviation, Mrs. Fidelia Njeze; the National Security Adviser, Lt. Gen. (rtd) Aliyu Mohammed; and the Director-General of NCAA, Dr. Harold Demuren, in the believe that they will intervene as an arbitrating party between Aero and Oceanic.
Syed added, “Despite the difficult situation that Aero finds itself in today, I am sure the strategic importance of Aero Contractors to the national economy will be appreciated and good sense will prevail all around.
Industry watchers are apprehensive of the fate of Nigerian Eagles Airlines which was currently bought over by business mogul, Jimoh Ibrahim who had previously bought over former EAS Airlines rebranded into Nicon Airways and then it went defunct barely months later.
Ibrahim, last week bought over the shares of business tycoon, Sir Richard Branson making him the majority shareholder in the airline, however that did not stop the airline’s managing director, Captain Dapo Olumide from resigning his appointment with the airline which he pioneered its rebrand from Virgin Nigeria.

Aero Contractors
Aero Contractors

Industry watcher and Head of Research, Zenith Travels, Olumide Ohunayo decried that Virgin should face such as fate as NICON whose workers are still in court fighting the same owner for their unpaid salaries.
He said,” It is with trepidation that the news got to the industry that NICON group has bought Virgin Nigeria, considering the calamitous entry of the group some years ago through the liquidated EAS airlines, which has prompted staff of EAS airline to go to court seeking redress for unpaid salaries and allowances. Should the affected workers continue to wait for the judicial process or go for a quick regulatory intervention since NICON has returned to the industry through Virgin Nigeria? ”
“Luckily, Virgin Nigeria is not listed on the Stock Exchange, the share price would have taken a drastic nosedive with that announcement based on that sad experience, coupled with sole –owner- manager syndrome that has bedeviled our domestic carriers which made almost all of them fail the NCAA financial audit with accompanying crippling debt, that has been detrimental to profitability and necessary public finance or public support in coveting critical public expenditure travel.”
“In welcoming the group back to the industry, they need to understand the new dynamics as exemplified by the airline, which is the impeccable systems, processes and management in place that needs some air of freedom in order to continue to maintain, sustain and retain the necessary benchmark that has made it a willing bride of foreign airlines.”
“It is not uhuru for the carrier except necessary running funds are immediately injected, ownership expanded to reflect the national carrier status of its founders, a good replacement for Capt Olumide if he cannot be convinced to stay while efforts are geared towards converting the aircraft options to firm delivery.”
“Anything short of this will make us a laughing stock in the Virgin empire and beyond.”
IRS is another airline wobbling on the ropes as one of its creditors First Bank had issued an advertorial to the public that it wanted to wind up the operations of the airline due to its non-performing debt; this led the other creditor, Union Bank Nigeria PLC to file a law suit at the Federal High Court.
The airline is said to owe Unity Bank about N3bn and after the acquisition of the bank by Union Bank the debt was transferred to the later, who has placed a Caveat Emptor on the airline and its assets.
Airlines continue to groan from the dire financial constraints they find themselves, and experts in the aviation sub-sector have said that if the diminishing trend in industry continues there may be no industry left to run very soon
President of the Aviation Round Table (ART), Captain Dele Ore who spoke at the 12th National Association of Aircraft Pilots and Engineers (NAAPE) Bi-ennial National Delegates Conference at the Sheraton Hotels in Lagos, said that this was so because the airlines were dying.
He said,” Airlines today are dying, and if they all die what will the Federal Airports Authority of Nigeria (FAAN), Nigerian Airspace Management Agency (NAMA) do to stay alive due to paucity of funds that they already face and what will the Nigeria Civil Aviation Authority (NCAA) regulate.”
According to Ore, the airlines were dying due to bad management and had no right to be asking for bailouts because they had mismanaged funds and are wrong in asking government to use tax payers’ money to bailout private businesses.
Minister of Aviation, Mrs Fidelia Njeze inaugurated an Aviation Ministerial Committee on Aviation, with a three week ultimatum within which to complete its assignment of looking into the problems affecting the industry as enunciated by the stakeholders such as – the issue of security and safety, high cost of operations incurred by airlines due to the alleged prohibitive landing and parking fees.
These airlines are hoping will bear fruitful results and aid them in getting back on their feet, although they are apprehensive over the short time at which the minister has to stay and whether her predecessor would continue her works of aiding the airline





About anthony omoh

I am a Journalist with a passion for developmental stories and nigerianflightdeck.com was born out of passion for reporting the travel, business and aviation sub-sector. This site is an expression of my ideals and creativity as a reporter and my discretion as a publisher. I am extremely content doing this and I am sure when you read my stories you'd understand that I touch people and that's why

Check Also

Dana Air partner MMA2 to reward air travellers

DANA AIR and Mma2 have entered into a partnership to reward passengers with low-cost tickets …

Delta Air Lines, Kenya Airways enter codeshare agreement expand connectivity between U.S., Africa

DELTA AIR LINES has entered into a codeshare partnership with Kenya Airways on flights to …

Ethiopian Airlines inviting African countries to buy its shares, vision

ETHIOPIAN Airlines is undisputedly Africa’s largest airline by revenue and profit. Yet the state-owned carrier …

Overland Airways flights to Cotonou, Lome open trade, business opportunities

WITH its commencement of flight services into Cotonou, the Republic of Benin and Lome, Republic …

Rodger Whittle appointed Executive Director of Resort Group

THE board of the Resort Group has announced the appointment of Mr. Rodger Whittle as …

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this:
Skip to toolbar