Nigeria’s Central Bank announced it has extended a USD3.3 billion bailout for the country’s domestic carriers (Associated Press/BBC News/AllAfrica, 31-May-2010). The fund will allow carriers to refinance their loans for 10 to 15 years. The bank stated the decision was made over its concerns about the heavy debt of the industry and the need to allow carriers to plan the settlement of their accrued loans. It considers the heavy debt profile is a risk to these banks and the banking industry. The Nigerian aviation industry consists of 21 registered operators with valid air operation certificates, 10 of which are commercial carriers and 11 are charter and cargo carriers. Of the commercial carriers, three are grounded, while seven are experiencing difficulties. The seven still in operation include Arik Air, AeroContrator, Associated Aviation, Chanchangi Airlines, Dana Air, IRS Airlines, Overland Airways and Virgin Nigeria. The carriers owe the Federal Airports Authority of Nigeria (FAAN) USD59.5 million, Nigerian Airspace Management Agency (NAMA) USD13.2 million and ground handling operators, Skyway Aviation Handling Company Limited, SAHCOL and Nahcoaviance more than USD19.8 million.
Nigeria’s Central Bank extends USD3.3bn bailout for domestic carriers
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Ethiopian Airlines expands in West Africa with 737-800s at Togo affiliate ASKY & Lome-Newark service
Ethiopian Airlines is building up its West African operation, through expansion at the Togo-based affiliate ASKY and new long haul services from Lome to New York and São Paulo. ASKY is adding capacity to several of its 19 destinations as it takes delivery of two 737-800s, which will be the largest aircraft in its fleet.
ASKY took delivery of its first 737-800 in early Jun-2016, giving it a fleet of eight aircraft including three 737-700s and four Bombardier Dash 8 Q400s. ASKY plans to take delivery of a second 737-800 by the end of 2016, which will be used to replace one of its Dash 8 Q400s, driving a further increase in capacity.
Ethiopian resumed services from Lome to São Paulo in May-2016 and plans to launch services from Lome to Newark in early Jul-2016. ASKY is playing a critical feeder role for both long haul routes and its expansion also enables it to increase its share of the intra-West Africa market.
CAPA global airline financial outlook
Operating margin to reach new high in 2016, but this may signal a subsequent downturn. CAPA’s global airline operating margin model indicates that the industry was more profitable in 2015 than it has been for almost five decades. Moreover, the model predicts that world airline operating margins will rise further above previous historic peak levels in 2016. These new levels of profitability are mainly thanks to the low oil price environment, coupled with strong demand growth in spite of global economic growth rates that are far from exceptional.
Much of the industry is also benefiting from a period of relative capacity discipline. New revenue sources may also be helping, although their role in airline profitability is still emerging.
The macroeconomic and geopolitical backdrops provide the main risks to this forecast. Beyond that, the biggest challenge for the industry will then be to try to sustain margin levels, rather than to allow a peak to be followed by a rapid downturn, as has always happened in the past. But downturns can play a positive role in industry development, possibly even stimulating consolidation.