Lessor may repossess airline’s planes over payment default

By Wole Shadare(The Guardian)



FRESH trouble awaits embattled domestic carrier- Air Nigeria, as its lessors are waiting in the wings to repossess some aircraft in its fleet.
The airline currently has 11 aircraft, made up of two Embraer-190, five B737-300 and four B737-400 and an Airbus330 leased for its London operation from Egypt Air.
The airline’s fleet and flight operations were grounded by the Nigeria Civil Aviation Authority (NCAA) for financial insolvency, after a week-long strike by pilots and engineers assailed its domestic and regional services over labour related issues.
At the sideline of the just concluded African Aviation ‘Air Finance’ conference in Johannesburg, South Africa, it was gathered that one of the airline lessors, GE Capital Aviation Services (GECAS), was reviewing the financial exposure of the airline and have concluded plans to recall its five B737-300.
The lessor, according to statements credited to the aviation ministry, indicated that the airline has been defaulting in the payment of its fleet lease rentals and is therefore auditing the finances of the airline.
Nigeria is a signatory to the Cape Town convention, which makes a lessor able to recover its aircraft without let and hindrance if it believes an airline is continually incapable of payments. The lease rentals for the B737-300 are $181,000 for an aircraft.
The airline, then known as Virgin Nigeria, had reportedly negotiated downward the lease rental of each B737-300 to $120,000. It then had five B737-300 and two E-190’s. The airline is still operating to London.
Analysts said that in view of the fact that the wide body A330 being used is on an ACMI bases from Egypt Air, it was not affected.
In aviation parlance, an ACMI indicates that the lessor provides the aircraft, the crew, maintenance and insurance cover for an aircraft.
But the operator is still growing the market having resumed operation on the route last month.
AERCAP holdings, a major European aircraft lessor in its June 2012 availability for an A330, says the aircraft is leased for $387,500 per month excluding maintenance reserves.
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