Business
COVID-19: AMCON wants FG to bailout airline operators
BY NICHOLAS ABE
The Asset Management Corporation of Nigeria (AMCON) has lent its voice to calls by aviation industry players for the federal government to bailout airline operators negatively impacted by the nation’s battle against the coronavirus infection.
Notwithstanding the low-income levels of the government occasioned by a huge fall in crude oil prices, AMCON’s Executive Director Operations, Mr. Aminu Ismail, said the corporation is in support of industry stakeholders that are urging the federal government to provide bailout packages to airlines currently threatening to reduce staff number by as much as 60 per cent.
Ishmael, however, said the federal government must be guided and more strategic this time around given that the previous bailouts that were given to domestic airlines in the country between 2009 and 2012 by the Bank of Industries (BOI), as well as the Power and Airline Intervention Fund (PAIF) by the Central Bank of Nigeria (CBN) were mismanaged by the airlines.
“AMCON is in support of any bailout from the government that would ensure the continued survival of the airline industry in Nigeria. However, any intervention in the aviation industry this time around must be directed at the core areas of need and should not become a jamboree. If the intervention comes in the form of grants, it must be to fund operational losses, which must be basically intended to save jobs and reimburse for operational losses induced by the COVID-19 pandemic and to promote local content – the intervention should focus on reducing dependence on foreign companies for pilot training and aircraft maintenance.
“For us, development of Nigerian based simulator capacity and C-Check for various Boeing aircraft types should benefit from government support. But should the government decide that their intervention will come by way of loans, it should be in form of low interest loans (with FX support) granted to strengthen the airlines in equipment overhaul, lease and purchase,” Ishmael proposed.
READ: AMCON may declare debtor public officers bankrupt
Insisting that liquidity would be key factor for airline to resume operational services after COVID-19, Ishmael said that AMCON would like to see the proposed federal government intervention in the sector as quickly as possible.
Again, he said, “In principle, any governmental intervention should be now but must not be used to resuscitate airlines that had stopped operations before COVID 19 broke out. Intervention for public good should be directed at aviation companies with large labour force and which carry the most passengers in the country. The government should not use its fund to support luxury consumption like charter firms that service the rich. Intervention from government should not be merely for loan restructuring but must be directed to the airlines, to grow the economy just as its disbursement must be controlled and strictly monitored by a regulator. Like I said earlier, the intervention should not be a jamboree.”
Ismail who spoke as a panel member at an aviation webinar said AMCON had injected about N50 billion into the aviation sector solely to stabilise airline operations in the country between 2012 and 2020.
He said AMCON’s intervention led to the purchase of about US$1 billion Non-Performing Loans (NPL’s) from Nigerian banks, owed by major Nigerian airlines including Aero Contractors, Arik Air amongst others. According to him, AMCON’s intervention is based on the understanding that notwithstanding the fact that the aviation sector accounts for around 8% of AMCON’s restructuring portfolio, it remains a critical sector of the nation’s economy and should be protected.