The Fairfax Africa Fund, known for supporting Nigeria Air, has made a worrying prediction about the future of the local airlines. Zemedeneh Negatu, the Fund’s Global Chairman, warned that the current economic crisis could cause most of the region’s airlines to face serious financial troubles, possibly leading to collapse. Negatu predicts that only one domestic Aviation firm could survive the economic challenges, causing waves of concern throughout the industry. Following remarks made by Prof. Obiora Okonkwo, Chairman of United Nigeria Airlines, predicting the downfall of the region’s aviation sector, Negatu reiterated his concerns, asserting that the situation is critical and beyond the reach of government support to rescue most airlines from imminent collapse.
Negatu made severe accusations against Air Peace and United Nigeria Airlines. He claimed that these aviation firms, with the help of the Airline Operators of Nigeria (AON), deliberately sabotaged the country’s air project, which could have been a revolutionary step for the industry. He believed that the sector had the potential to attract crucial foreign investments and contribute to industry stability. Unfortunately, these plans were hindered by individuals who prioritised personal gain over the nation’s best interests and disguised their actions as acts of patriotism.
Local aviation firms were accused of hindering foreign direct investment.
He further contended that intertwining self-interest with Patriotism is an ineffective approach to business. He expressed disappointment in Air Peace and United Nigeria for blocking solid Foreign Direct Investment (FDI) in the aviation industry, warning that such actions could stop other Investors from pursuing similar opportunities. He was frustrated by the flight operator’s decision to prioritise their interests over the industry, which could have a lasting impact on the national aviation sector. Also, Justice Lewis Allagoa of the Federal High Court in Lagos recently made a significant legal ruling.
On August 5, 2024, the court declared the sale of air shares to Ethiopian Airlines unlawful. This ruling highlighted various breaches of the Companies and Allied Matters Act and Securities and Exchange Commission regulations. The judgment deemed the bidding process null and void, cancelled Nigeria Air’s Air Transport License, and permanently banned former Minister of Aviation Hadi Sirika and Ethiopian Airlines from participating in the project in any capacity. In response to Negatu’s concerning predictions and accusations, Prof. Obiora Okonkwo, who represents the AON, refuted these statements as unfounded.
Expert denied forecasts, blaming the airline crisis on economic downturn.
Okonkwo emphasised that the challenging economic circumstances impacting the aviation industry are a common struggle for all industry players, unrelated to Fairfax’s forecasts. He emphasised the difficulty of the country’s economic landscape affecting various industries, not solely aviation. He believes that the aviation sector is not at risk of failing because of Negatu’s predictions but instead because of the overall economic conditions. According to him, the aviation sector has survived due to Ethiopian Airlines and its partners’ shortcomings in implementing a plan for the air industry that he considers disastrous.
Furthermore, he was proud to be associated with Allen Onyema, the Air Peace Chairman, as they were both members of AON. Together, they took legal action against the federal government and Ethiopian Airlines, successfully protecting the industry from a scheme that Okonkwo believed would be catastrophic. He further emphasised the court case, claiming that Ethiopian Operators missed their chances to provide evidence of their investment, resulting in a permanent ban on owning shares in Nigeria Air.
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Moreover, he noted that Negatu stood to benefit from a three percent share in the air sector and exclusive procurement rights as a transaction advisor. Okonkwo dismissed Negatu’s grievances as mere whining, affirming that the two aviation firms were honoured to have contributed to preventing the region from engaging in a questionable deal. The aviation industry is facing an unpredictable future due to economic difficulties and previous scandals that continue to influence its trajectory. The sector’s ability to adapt and thrive in a shifting and challenging economic environment will ultimately determine its survival as stakeholders engage in discussions and justify their decisions.