Aero: What a pity?

Two airlines went off business last week. Aero Contractors and First Nation Airline. Aero proceeded on indefinite leave, First Nation went for repairs.
But there is a common denominator: they are unable to function optimally due to economic challenges and operational difficulties.
Aero announced suspension of operations on Wednesday, August 31, First Nation did on September 1. Aero made its decision known through its management, First Nation did through the Nigerian Civil Aviation Authority (NCAA).
NCAA Director General, Muhtar Usman, explained that the decision was taken to ensure the airline carried out maintenance on its aircraft.
“The First Nation Airlines on its part is in the middle of an engine replacement programme for one of its aircraft. Another aircraft is due for mandatory maintenance as allowed by the regulatory authority.
“In these circumstances, these airlines clearly cannot continue to undertake schedule operations, hence the inevitable recourse to self-regulatory suspension,” Usman said.
When in 2012 the government through the Asset Management Company of Nigeria (AMCON) took over Aero Contractors because of its billions of naira indebtedness to several banks, many Nigerians did not understand the enormity of the problem about to befall the air transportation sector.
The worst happened on Wednesday, August 31 when Aero announced it was going on indefinite leave due to the harsh operating environment.
Before now, many airlines had taken similar options. Aero’s did not come as a surprise.
For sometime now, Aero, once noted for its safety and timeliness, among other noteworthy attributes, provided epileptic services to the public, caused primarily by the non-alignment of fundamental issue of the business.
What was happening to the airline was frustrating and embarrassing to all parties: staff, customers and all stakeholders.
Aero Contractors, with the famous Ibru family having controlling shares, was said to be owing banks N32 billion. Add the interest that had accumulated on the principal facility the airline collected over the years you would appreciate why today, the airline believed to be the best Nigeria, closed shop.
AMCON took over Aero to help find ways of repaying the loans it accumulated in banks, dubbed non-performing loans, which signposted that the aviation industry had plunged further into crisis.
“We can confirm that Aero’s debt has been taken over by AMCON. Currently Aero is going through a restructuring exercise under AMCON, pending final approval by AMCON board which is expected very soon,” Omoke Enyi, Aero Contractors Chief Financial Officer said then.
“The airline is allowed limited access to funds by the banks through AMCON for its working capital.”
Aero Contractors of Nigeria was formed in 1959 as a wholly owned firm by Schreiner Airways B.V of the Netherlands. It became a company with initially 40 per cent Nigerian holding in 1973 and 60 per cent in 1976.
In January 2004, Schreiner Airways was bought by Canadian Helicopter Corporation (CHC) which acquired 40 per cent holding of Aero while 60 per cent remained within the Ibru family.
Today, many believe Aero is wholly owned by the Ibru family.
Aero started in the early 1960s as an air charter flight. In the 1970s, it started providing both rotary and fixed wing services to all the major oil, gas and related support companies in West Africa.
Aero, Nigeria’s oldest private airline, became the preferred airline of multinational oil companies.
With technical support offered by CHC, the world’s largest commercial helicopter operator, the key role Aero played in the oil and gas operation in Nigeria could no longer be hidden.
On its website, Aero, which is based in Lagos, says it operates a “combined fleet of around 20 helicopters and 15 fixed wing aircraft ranging from 50 seat Dash 8 to 144 seat Boeing 737-400/500, employing about 1,300 personnel.”
When, therefore, the airline announced on August 31 that it was closing its operation, many of its customers were unsettled.
But that decision was inevitable given that Aero was functioning with one Boeing B737-500 and two Dash 8 aircraft still airworthy, out of 11 aircraft in its fleet.
Aero Chief Executive Officer (CEO), Fola Akinkuotu, said the development was part of a strategic business realignment to reposition the airline and return it to profit.
He said Aero faced grave challenges in the past six months that impacted on its business, and “these factors are both internal and external environmental that made it difficult for the airline to continue its scheduled services.
“As part of its resolve to ensure that the airline survives, unlike most other carriers that have experienced short life spans in the country … (AMCON) had appointed Adeniyi Adegbomire, as receiver manager in February 6, 2016, with the aim of turning the airline around.
“Since AMCON’s intervention in Aero Contractors in 2011, it has provided support for the airline to meet working capital requirements and fleet expansion. These were to ensure the airline remains a going concern providing services to various clients and the general public.
“Unfortunately, the operating environment within and outside the airline have hindered any possible progress especially in the last six months when the naira depreciated against the dollar, thus making it impossible for the airline to achieve its operational targets ….
“The impact of the external environment has been very harsh on our operational performance, hence management’s decision to suspend scheduled services and operations indefinitely effective September 1, 2016, pending when the external opportunities and a robust sustainable and a viable plan is in place for Aero Contractors to recommence its scheduled services.
“The implication of the suspension of scheduled services extends to all staff directly and indirectly involved in providing services, as they are effectively to proceed on an indefinite leave of absence during the period of non-services ….
“Management of the airline was aware of the impact this will have on our staff and our highly esteemed customers, hence we have initiated moves to ensure that we are able to return back to operations within the shortest possible time, offering reliable, safe and secure operations, which the airline is known for.”
On Thursday, September 1, aviation unions besieged the head office of Aero Contractors at the Murtala Muhammed Airport, Lagos to protest the indefinite leave which affects 1,400 workers. That was expected.
President of Air Traffic Services Senior Staff Association, Benjamin Okewu, who led his other members told reporters they embarked on the measure following the indefinite leave given to the workers.
Air transportation business is going through stress which will worsen with the temporary exit of Aero and First Nation. Air travellers will be left with very few choices. And that is dangerous.
Yes, Aero was mismanaged, including by its owners, the Ibrus; but since it was in receivership, what gains can AMCON say it recorded after taking over its operation?
Is it not high time we questioned the capacity of AMCON to restore dying companies to profitability?
Aero is one firm no regular air traveller would want to go under despite its often arrogant and rigid operational nature. One thing no one takes away from Aero is its emphasis on safety while on air and high standard.
Flyers will really miss Aero. Its stakeholders should return it to business when sympathy it is still high or they would have lost the airline forever.