Arik, others to benefit from $20b Afreximbank loan
Nigeria’s flag carrier, Arik Air, has been selected among other airlines in Africa that will benefit from an African Export-Import Bank (Afreximbank) loan.
The facility, put at over $20 billion (about N4 trillion) has been earmarked as part of syndicated loans to assist the carriers get out of the woods.
Senior Manager, Syndicated and Special Finance Department, Afreximbank, Samuel Mugoya, said this in Johannesburg, South Africa, at the opening of 25th Annual Air Finance in Africa summit.
Although, Mugoya did not disclose the actual amount his firm intends to offer to Arik, a source said that it could be up to $200 million, adding that the Nigerian carrier was in dire need of expanding its operations.
While delivering a paper on, “Challenges in Syndicating Aviation Finance Deals for Africa,” he stated that over 90 per cent of the airline’s revenue comes in naira, whereas its expenses are done in the United States dollars.
Mugoya equally stated that Africa needed to do more on aviation infrastructure, adding that his interaction with airlines in Nigeria showed that the quality of the runways were bad, posing serious danger to aircraft.
His words: “We are working to finance Arik Air’s operations by preparing loans for the airline. Aviation in Africa is still lagging behind. For instance, Arik generates 90 per cent of its revenue in naira, but makes expenses in dollars like buying of aircraft spare parts and maintenance of its fleet. That is a real problem not only for Arik, but other airlines.
“On aviation infrastructure, Africa needs to improve in order to compete with big airlines. From my interactions with airline operators in Nigeria, they complain of the quality of runway of most of the airports.”
He further disclosed that out of the 54 countries in Africa, only three, South Africa, Botswana and Mauritius, are investment rated, describing others, including Nigeria, Egypt and others as “junk rated.”
Speaking in the same vein, a former Secretary General of African Airlines Association (AFRAA) and the convener of the summit, Nick Fadugba, said in order to syndicate deals, airlines needed to come together and cooperate. “How are you going to finance airplane acquisition when virtually all countries in Africa are junk rated?
“This is not a good record. We need leadership in Africa. We lack strategy and implementation for all the grand schemes.” He regretted that African airlines were in intensive ward, lamenting that the continent enjoyed only 18 per cent of the entire global air traffic.