In a groundbreaking partnership, Ethiopian Airlines Group, in conjunction with Nigerian institutional investors and the Nigerian government, is set to launch Nigeria Air, a new airline with anticipated operations commencing as early as October. This strategic move is poised to significantly impact the West African aviation landscape.
The CEO of Ethiopian Airlines, Mesfin Tasew, revealed that Nigeria Air’s initial fleet will comprise two wide-bodied planes and six narrow-bodied aircraft. The collaboration is expected to provide Ethiopian Airlines, the largest carrier in Africa, a foothold in Nigeria, where competition among approximately 23 domestic airlines is fervent.
However, Nigeria’s pursuit of a national flag carrier has faced challenges in the past. Previous government initiatives to establish such an entity have faltered. The Nigerian government will retain a 5% ownership stake in Nigeria Air, while Ethiopian Airlines will secure a controlling 49% stake in the newly formed airline. The remaining shares will be held by Nigerian institutional investors, including entities like MRS Oil Nigeria Plc and key players from the aviation sector.
Zemedeneh Negatu, global chairman of Fairfax Africa Fund LLC, a pivotal contributor to raising funds for this venture, emphasized that significant institutional investors and a “big financial institution” are part of the investor consortium.
Nigeria Air aims to launch with domestic operations encompassing 15 routes. Subsequent expansion plans encompass West African destinations, as well as international routes including London, New York, and Shanghai. Despite the nation’s challenging aviation environment characterized by issues like access to foreign exchange, high aviation fuel costs, and multiple taxation, the Nigeria Air venture aims to invigorate the industry.
With its profound operational experience spanning six decades, Ethiopian Airlines is well-positioned to facilitate Nigeria Air’s access to aircraft leasing at more favorable rates, contributing to the financial sustainability of the new airline. Fairfax Africa Fund LLC, based in Washington DC, has successfully secured $250 million in equity financing for Nigeria Air. Moreover, discussions are underway to potentially secure an additional $50 million from two sizeable institutional investors.
Nigeria Air’s vision extends beyond domestic routes, encompassing aspirations to expand into West African cities and international destinations such as London, New York, and Shanghai. Although the Nigerian aviation sector poses challenges stemming from currency fluctuations, high aviation fuel costs, and complex taxation frameworks, this partnership is determined to navigate these hurdles to create a transformative impact.
As Nigerian carriers have grappled with sustainability, Nigeria Air’s strategic approach holds promise for the nation’s aviation industry. Previous attempts at establishing a flag carrier encountered setbacks, but this collaboration demonstrates the resolve to overcome historical obstacles and redefine Nigeria’s aviation trajectory.
With a foundation built on institutional partnership and leveraging Ethiopian Airlines’ operational expertise, Nigeria Air aims to not only navigate the complexities of Nigeria’s business landscape but also thrive and catalyze growth in the aviation sector.
As the collaborative effort between Ethiopian Airlines, Nigerian investors, and the government gains momentum, the imminent debut of Nigeria Air in October holds promise for transforming Nigeria’s aviation landscape and fostering new opportunities in the sector.
