Air Nigeria May have its Planes Repossessed on Lease Defaults
Embattled local air carrier, Air Nigeria may have several of its aircraft repossessed by the company it entered into lease agreement with due to its failure to honor its debt obligations in a timely manner.
Air Nigeria was recently grounded by the Nigerian Civil Aviation Authority (NCAA) for financial distress is also facing legal proceedings brought against it by the Federal Inland Revenue Service (FIRS) for tax obligations totaling N 5 billion.
The revelations concerning the repossession of aircraft from Air Nigeria’s fleet came at the tail of an Aviation conference in Johannesburg. It was learned that GE Capital Aviation Services (GECAS), the lessor is currently reviewing its financial exposure to the airline and has already concluded plans to recall five of the B 737-300’s it leased to Air Nigeria.
The aircraft were leased when Air Nigeria was Virgin Nigeria and the lease payments for each aircraft is $ 181,000. Reportedly Virgin Nigeria had negotiated the lease payments down to $ 120,000/aircraft before Jimoh Ibrahim took over the company.
However the company had not been able to meet up on its lease payments. Nigeria is signatory to the Cape Town convention which allows the lessor rights to recover the aircraft without any hindrance if the lessee is unable to meet its financial obligations.