• Sunday, June 23, 2024
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BusinessDay

FX shift: More troubles for airline as operators abandon aircraft overseas

airline

Airline operators in Nigeria are said to be facing more troubles, as some Nigerian airlines are unable to bring in their aircraft taken abroad for repairs and maintenance as a result of expensive maintenance bills arising from naira depreciation.

Sources at the Nigerian Civil Aviation Authority (NCAA) confirm this development, saying about 25 percent of existing aircraft owned by commercial airlines are on maintenance or AOG (aircraft on ground) either because they are no more airworthy or are due for maintenance.

Some of the places the aircraft had been kept for maintenance over six months now include Europe, South Africa, Middle Ease and the United States.

Investigations carried out by BusinessDay show that airlines generate revenues in naira but carry out maintenance and purchase of major aircraft parts in foreign currency. So, with the depreciated naira, the airlines are paying double what they used to pay to carry out mandatory C-Check on their aircraft.

The naira adjusted by 29 percent to N282 against the dollar in the interbank foreign exchange (FX) market as the Central Bank of Nigeria (CBN) intervened massively to ease demand for the greenback.

The CBN sold $4.02 billion in special secondary market intervention sales (SMIS) and $46.5 million on the interbank market at N281 to N285 to the dollar on the first day of the trading after its currency peg was removed, Thomas Reuters data showed.

“Operational costs are stifling the country’s domestic airlines, such that they cannot afford to acquire hangars on their own,” Nogie Meggison, president, Airline Operators of Nigeria, told BusinessDay.

“Unfortunately, only Arik and Aero have maintenance hangars in their bases in Nigeria. That is not to say they are in anyway different from others, because Arik Air is in partnership with Lufthansa, where they pay heavily. Also, Aero cannot go beyond C checks,” Meggison said.

Other airlines can only carry out ‘line checks’ at the airsides, he said, adding that even though airlines are no longer required to pay duty on parts imported into Nigeria, the manufacturers directives on aircraft maintenance have to be strictly adhered to.

Further checks by BusinessDay show that airlines pay a minimum of $500,000 to $700,000 for engine overhaul, and about the same amount of money for C-Check maintenance on a Boeing 737 aircraft.

At N361 per $1 in the parallel market this will amount to N180.5 million and N252.7 million, respectively.