Arik in talks to lease Aero aircraft over low cash flow, passenger traffic –

Arik P’Harcourt bound flight makes air return over sudden fault

By Chinelo Obogo, [email protected] 09051862508

Barring any changes, Arik Air may soon commence operations with an Airbus A320 aircraft initially leased by Aero Contractors last year, due to the latter’s cash flow problems and general slump in passenger traffic, Daily Sun can reveal.

In the fourth quarter of last year, Aero Contractors revealed that it received two Airbus A320 aircraft on lease to help expand its capacity. However, reliable sources told Daily Sun that one of the aircraft developed engine problems and has not been in operation for some months, while the financier who facilitated the lease has withdrawn the second one following Aero’s inability to continue payment on schedule.

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“The aircraft involved is one aircraft and not two because one had engine problems and it was taken out, while the other one has been given to Arik. The guy that was financing it had to take it to Arik because Aero was unable to continue payment for it. When they took the aircraft out of Aero, they started negotiating again for the aircraft to be brought back to them, but the management of Aero advised the financier who facilitated the lease to take it to Arik where he would be getting his pay.

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“When an airline leases an aircraft, it pays for the agreed hourly utilisation of the aircraft, which can be some hours per month. You pay for the minimum agreed hours, irrespective of whether you use up to the agreed hours or not.  Utilisation is usually calculated in block hours not in flight hours. Block hours mean from the time when the engine starts to when it goes off and flight hours means from take-off to landing.

“One of the reasons Aero was unable to continue paying for the aircraft is that there is a slump in passenger traffic. Yet, you are paying for the lease of the aircraft at the rate of $3,000 per block hour. By the time you make payments for the lease, you would realise that there is nothing left. So the major reason the aircraft was taken away is because Aero cannot continue to pay for the lease because there aren’t enough passengers.

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“Currently, Aero has just two aircraft flying and this cannot even meet the needs for their destinations. So they had to cut it down. For now, the major source of income for the airline is the Maintenance, Repair and Overhaul (MRO) and that is what they are focused on. They are trying to restructure it, but without that Airbus A320, they cannot do much in terms of flight operations.

“As we speak, they have reduced their Sokoto flights which is one of their lucrative routes from seven times a week to four times, their Asaba flights have also been cut down. For Abuja and Kano, which they used to do seven times a week, have now been cut down to four times a week.

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“They have also cancelled their Benin flights and there is no hope to get additional flights and they don’t plan on getting another aircraft to replace this one. Their MRO is doing well but it is not generating enough income to meet their overhead cost, so, after paying, they cannot say that they are making profit,” the source said. 

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When contacted, the Managing Director of Aero, Mahmoud Abdulahi confirmed that the airline is facing some challenges due to passenger traffic slump and was unable to meet its financial obligations at the time. He, however, said his administration is working round the clock to ensure that its operations go on seamlessly.

The receiver manager of Arik Air, Kamilu Omokide, when contacted, confirmed that the airline is in talks to lease the Airbus but that no decision has been made.

“There is a proposal for us to take in the Airbus but I have not given my approval. However, this administration will do all within our power to maintain the Arik brand and its  market share and make sure that things are running smoothly,” Omokide said.

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