The launch of a new airline in Nigeria seems a step closer, now that the government has selected Ethiopian Airlines as the preferred bidder. Ethiopian is set to become a minority shareholder in Nigeria Air. However, there seem to be last-minute issues about who will be the majority shareholders in Nigeria. Ethiopian preferred bidder of new Nigeria Air.
The Nigerian government said on September 23 that Ethiopian had been selected as the preferred bidder after a careful selection process that started in February. Back then, the government issued a request for proposal that initially was scheduled to be completed in July, but this has taken two months longer.
A consortium led by Ethiopian Airlines will acquire 49 percent of Nigeria Air. The Nigerian government will have a five percent stake and a consortium of Nigerian investors 46 percent. Last week, the Minister of Aviation, Hadi Sirika, said that this consortium included MRS, SAHCO, and the Nigerian Sovereign Investment Authority.
But on September 27, a special assistant of the minister said that NSIA had been inadvertently included in the investment. “We wish to clarify that the Authority is not involved, in any way, as part of the private equity ownership of the airline, being a government establishment”, special assistant, James Adaudu, is quoted in The Guardian. He said that NSIA was mentioned by mistake during a press conference. It isn’t clear who will take over as a private investor now. Nigeria Air will launch with a share capital of $300 million, which will be used as cash flow funding for a three-year period.
Deal expected to be concluded within two months
After a due diligence procedure by the Nigerian government to check the solidity of the Ethiopian proposal, the next step is concluding a full business case that needs approval by the Federal Executive Council. This is expected to take six to eight weeks. Once this is completed, Nigeria Air should be able to launch a shuttle service between Abuja and Lagos pretty soon. The start-up has already secured an Airline Operator Certificate (AOC) and its Air Transport License. Final inspection by the Nigerian Civil Aviation Authority when Nigeria Air can start operations.
Nigeria Air will launch with a fleet of three Boeing 737-800s, but it is expected from the Ethiopian Airlines consortium that they will invest in a fleet of up to thirty aircraft within two years. The carrier will initially focus on domestic routes, competing with a number of airlines like Air Peace, Allied Air, Arik, Azman Air Services, Green Africa, Ibom Air, Max Air, and Overland Airways.
Plans for Nigeria Air were first unveiled during the 2018 Farnborough Airshow, but the Federal Executive Council took the “tough decision” in September of that same year to suspend the project. The carrier will be the national airline of Nigeria and, as such, become the successor of Air Nigeria, which operated between June 2010 and September 2012 with a fleet of twelve aircraft.
Nigeria is not the first airline in which Ethiopian Airlines Group is investing. It already owns a 24 percent share in ASKY in Togo, 49 percent of Malawi Airlines, 49 percent of Tchadia Airlines, 99 percent of Ethiopian Mozambique Airlines, and 51 percent of DHL-ET Logistics Services.
