Arik in talks to lease Aero planes due to low cash flow and passenger traffic – The Sun Nigeria
By Chinelo Obogo, [email protected] 09051862508
Except In the event of a change, Arik Air could soon start operations with an Airbus A320 initially leased by Aero Contractors last year, due to the latter’s cash flow problems and a general drop in passenger traffic, Daily Sun can reveal.
In the fourth quarter of last year, Aero Contractors revealed that it had received two Airbus A320s on lease to help increase capacity. However, reliable sources told the Daily Sun that one of the planes developed engine problems and has not operated for a few months, while the financier who facilitated the lease withdrew the second following the inability Aero to pursue payment on time.
“The plane involved is one plane and not two because one had engine trouble and it was retired, while the other was given to Arik. The guy who was financing it had to take it to Arik because Aero could not continue to pay him.When they removed the plane from Aero, they started to negotiate again to have the plane returned to them, but Aero management advised the financier who facilitated the lease to take him to Arik where he would receive his salary.
“When an airline leases an aircraft, they pay for the agreed hourly use of the aircraft, which may be a few hours per month. You pay for the agreed minimum hours whether or not you use the agreed times. Usage is usually calculated in block hours, not flight hours. Block hours mean from when the engine starts to when it shuts down and flight hours mean from takeoff to landing.
“One of the reasons why Aero has not been able to continue to pay for the aircraft is that there is a drop in passenger traffic. Yet you pay the rental of the aircraft at the rate of $3,000 per hour -block. By the time you make the payments for the lease, you’ll realize there’s nothing left. So the main reason the plane was retired is because Aero can’t continue to pay the lease because there are not enough passengers.
“Aero currently only has two aircraft in the air and that can’t even meet the needs of their destinations. So they had to cut it. At the moment, the airline’s main source of income is maintenance, repair and overhaul (MRO) and that’s what she’s focusing on. They’re trying to restructure it, but without this Airbus A320, they can’t 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 reduced. For Abuja and Kano they had the used to do seven times a week, they have now been reduced to four times a week.
“They have also canceled their flights to Benin and there is no hope of getting additional flights and they are not planning to buy another aircraft to replace this one. Their MRO is doing well but it is not generating not enough revenue to cover their overhead, so after paying they can’t say they are making a profit,” the source said.
When contacted, Aero’s chief executive, Mahmoud Abdulahi, confirmed that the airline was facing challenges due to declining passenger traffic and was unable to meet its financial obligations at the time. He, however, said his administration is working around the clock to ensure that its operations run seamlessly.
Arik Air receiver-manager Kamilu Omokide, contacted, confirmed that the airline is in talks to lease the Airbus but no decision has been made.
“There is a proposal for us to host the Airbus but I have not given my agreement. However, this administration will do everything in its power to maintain the Arik brand and its market share and make sure everything runs smoothly,” Omokide said.