The New National Carrier: Nigeria Air Unveiled - To Commence Operations In December, 2018

The Minister of State for Aviation, Hadi Sirika on 18th July 2018 disclosed the name and logo of Nigeria’s new national Carrier at the Farnborough International Airshow in London. He noted that “This will be a National Carrier that is Private sector-led and driven. “It is a business, not a social service. The government will not be involved in running it or deciding who runs it. The investors will have full responsibility for this” Following the unveiling, there were social media rumors surrounding the whole project, this led to a clarification by the Minister. TGI New has presented a part of the clarification below:

“As part of the airline PPP project development phase – Nigeria Air Limited - has been incorporated with the corporate affairs commission for now as a wholly government owned company with the corporate affairs commission using nominal directors who are directors of the ministry of aviation. On conclusion of the PPP procurement process, when full equity structure pre financial close is finalized the incorporation will be updated and certificate of incorporation made public.

Nigeria Air Limited is in now a legal entity. Further to the incorporation of the company with nominal directors the domain name has been reserved and made active as part of the project evolution and marketing process. In terms of ownership Nigeria’s national carrier by international convention must be majority Nigerian owned to enable the country and its citizens enjoy the benefits and privileges accruing to it. So in all cases majority ownership in equity terms will be Nigerian, while management of the national carrier will be concessioned via a renewable long term operate and maintain concession agreement to the minority private sector strategic equity partner to be selected via an open competitive international two stage PPP procurement exercise.  Government will owned only 5% equity while the remaining 95% will be private sector owned (who will be mostly Nigerians). In terms of funding, the sum of $8m represents startup capital for offices etc required for takeoff. $300m is the entire airline cash flow funding requirements (aircrafts, operations and working capital) for three years (2018, 2019 and 2020).

This funding can be in the form of equity or debt. The financial model estimates cash flow requirements as follows 2018 ($55m - $8 million is included here), 2019 ($100m) and 2020 ($145m). In order to ensure take of the airline in 2018 government will provide US $55 Million upfront grant/viability gap funding to finance startup capital and pay commitment fees for aircrafts to be leased for initial operations and deposit for new aircrafts whose delivery will begin in 2021”.

Ochenuel Mobility consider this will be a positive development for Nigeria. Recall that Nigeria’s first national carrier was established in 1958 and stopped operations in 2003 with more than 30 aircraft on its fleet in the 1980s.