These are not good times for Nigerian airlines, as extinction stares at their faces.
Barely one month of closing her airspace and airports to scheduled commercial operation, as part of measures to check the spread of the coronavirus disease, indications have emerged that some Nigeria airlines have begun to find routes into their shells.
According to a competent insider source, most of the local airlines, in their weak nature, would not survive the shutdown.
With Arik Air announcing 80 per cent pay cut for workers and placing 90 per cent on leave without pay, the source said the news did little to shock the industry.
“With this kind of total shutdown of operations, it will be difficult, if not impossible, for most of the airlines to remain afloat. This is similar to having airlines grounded. How many of our grounded airlines were able to rise again?” said the frontline aviation unionist who pleaded anonymity.
Nigeria’s second oldest airline, Arik, announced on Friday that it was implementing 80 per cent pay cut for all staff of the company for the month of April 2020, while putting 90 per cent workforce on compulsory leave without pay from May 1.
Currently, with 22 aircraft on its fleet, Arik had managed to remain afloat after narrowly surviving liquidation. The once biggest airline in the country is now under the ownership of Asset Management Company of Nigeria, a private concern set up by the Nigerian government to manage failed companies on its behalf.
“We expect several other airlines to embark on major staff pay cut and even going under,” the source hinted.
In a letter to staff members, signed by the Chief Executive Officer, Roy Iloegbu, Arik said the decision would be reviewed after a month.
He stated, “After careful deliberation and analyses, management has decided to implement an 80 per cent pay cut for all members of staff across the entire organisation for the month of April 2020. Further, commencing from May 1, 2020, no less than 90 per cent of our staff will proceed on leave without pay until further notice. This position will be reviewed on a monthly basis and communication on further developments will be shared by our Human Resources department as the situation evolves.
“While we are not unaware of the challenges that each and every one of us may face during this difficult period, we join you in remaining hopeful that this ugly situation will abate in the shortest possible time and our organisation will come out stronger in the long run.”
According to him, the airline has suffered a sharp decline of over 98 per cent in revenue streams since the suspension of scheduled flights a month ago.
Accountable Manager of Dana Air, Obi Mbanuzuo, had two weeks ago called for government aid to the airlines to help secure the jobs of over 129,000 Nigerians engaged by the airline and travel industries, a position the Airline Operators of Nigeria held since the beginning of the lockdown, seeking financial palliatives and low credit from government.
Earlier, the International Air Transport Association had warned that Nigeria would lead African airlines in a whopping N2.6tr loss to COVID-19.
According to IATA, Nigerian airlines stand to lose about N390bn in revenue loss after seeing 4.7m fewer passengers.
IATA also reiterated that Nigeria would face about 125,400 jobs losses.
The Regional Vice President for Africa and the Middle East, Muhammad Al Bakri, said IATA had appealed to development banks and other sources of finance to support Africa’s air transport sectors on the verge of collapse.
He explained that airlines on the continent were struggling for survival, buttressing that Air Mauritius had entered voluntary administration while South African Airways and SA Express were in business rescue.
Bakri posited that other distressed carriers placed staff members on unpaid leave or signalled their intention to cut jobs, warning that more airlines would follow suit without urgent financial relief.
The economic damage of a crippled industry extends far beyond the sector itself, he said, noting that aviation in Africa supported 6.2m jobs and $56bn in Gross Domestic Product.
Bakri said, “IATA is seeking the intervention of the Federal Government on relief measures for the continent’s carriers. IATA expected revenue loss to the continent’s carriers was $2bn, which is more than the expectations at the beginning of the month.”