New Aircraft Leasing Initiative Aims to Bolster Local Airlines
The federal government of Nigeria has announced plans to establish a new aircraft leasing company, designed to mitigate risks for lessors and enhance access to leased aircraft for local airlines. This initiative will feature government guarantees, requiring minimal capital investment.
At a high-level meeting with airline representatives and aviation stakeholders in Abuja, Festus Keyamo, the Minister of Aviation and Aerospace Development, clarified that while this plan does not offer immediate financial relief to airlines, it provides essential guarantees. These cover legal ownership, safety compliance for the aircraft, and the right to repossess the aircraft in the event of a lessee’s default.
The government’s involvement will be limited, with an anticipated stake of 5% to 10% in the aircraft being leased. Rather than managing the airlines directly, the government aims to generate revenue by acting as a facilitator to empower these businesses.
Keyamo further explained that this framework is intended to resolve ongoing difficulties faced by foreign lenders. He noted that past deregistration efforts by the Nigerian Civil Aviation Authority (NCAA) did not always ensure the efficacy of aircraft seizures, as other agencies, such as Customs, could obstruct the process. The new sovereign guarantees will compel all government agencies to cooperate during repossession, thereby making the government accountable for compliance.
A special purpose vehicle (SPV) for the leasing company is currently under development, with completion expected within weeks. While fundraising efforts are already in progress and generating international interest, no specific timeline for finalization has been provided.
Keyamo also addressed concerns regarding foreign exchange. The new leasing arrangement is intended to alleviate pressures on foreign exchange markets and minimize capital outflows. He emphasized that the government will not be involved in purchasing aircraft but will instead provide sovereign guarantees regarding their safety and recoverability.
Reiterating the government’s unique position within the African aviation landscape, Keyamo highlighted Nigeria’s abundance of private airlines compared to other nations on the continent, where major airlines mostly remain government-operated or subsidized. He expressed the importance of supporting the private sector to enhance the stability and competitiveness of the country’s aviation industry, thus fostering economic growth. Mr. George Ulisi, Managing Director and CEO of Ibom Air, commended Keyamo’s intervention, stating that the establishment of a Nigerian leasing company would significantly ease aircraft acquisition for local operators.
