Nigeria Air: Ethiopian Airlines pulls through with 49% largest stake

Ethiopian Airlines has emerged as the preferred bidder for the Nigeria Air project, cutting the largest share of the pie (49%) in a consortium with three other Nigerian investors – MRS, Skypower Aviation Handling Company (SAHCO) and the Nigerian Sovereign Fund owning 46 per cent of the share, while the Federal Government of Nigeria takes 5 per cent.

Nigeria’s Minister for Aviation, Hadi Sirika, disclosed at a press briefing held in Abuja that the consortium will be subjected to a due diligence process, after which the contractual agreements will be finalized.

According to Sirika, all negotiations are between the consortium and the FGN, believing that a Full Business Case will be signed within a timeframe of 6-8 weeks (about two months) with the approval of the Federal Executive Council (FEC).

Before the project takes off, the Minister explained that share capital of around $300 million will be provided by the preferred bidder to launch the airline to its full size of 30 aircraft that will be used for both local and international operations within the next two years.

He also disclosed that apart from the 5% share investment, the FGN will not provide any other funding going forward.

Sirika announced that, for a start, the airline will be launched with three Boeing 737-800, in a configuration very suitable for the Nigerian market, and will begin a shuttle service between Abuja and Lagos before going international.

“All Executives have been approved by NCAA, the Air Transport License has been issued by NCAA, Nigeria Air (after having identified the first three aircraft) will now finalize all necessary Operation Manuals and then go through the inspection and approval process of NCAA.

“The money spent for the launch of Nigeria Air, for all the requirements to establish an AOC and be admitted starting an airline operation, is well within the 5% capital investment of the Federal Government of Nigeria, that will be overall needed to establish the National Carrier initially for the AOC approval and everything else required by stringent national aviation regulations, as prescribed in the FEC approved Outline Business Case (OBC).

“This OBC is the milestone for the preferred Bidder Consortium and has been met by the submitted business plan of the preferred bidder. It is the overall share capital of around US$300, provided by the preferred bidder that will launch Nigeria Air to its full size of 30 aircraft and international operation within the next two years.

“No further FGN funding will be provided above the 5% share capital of the next national Carrier of Nigeria, which was provided to launch Nigeria Air,” Sirika said.

He confirmed that a signature-ready contract has already been finalised with Ethiopian Airlines for the three Boeing 737-800 with 16 Business Class and 150 Economy Class configurations.