Security structure crucial to aircraft leasing – Boeing Director

Ms Rose Lereece, Director Customer Finance, Boeing Commercial Airplanes has said that security structure is crucial  in obtaining aircraft lease. Lereece made the assertion at the Airline Economics Growth Frontiers Global in Dublin, Ireland, on Wednesday. The Airline Economics Growth Frontiers Global event commenced on Jan. 12 to end on Jan. 15. The director described the security structure as a “Stand-by Letter of Credit (SBLC),’’  serving as a security provided by a commercial bank and covered by a confirming Banking and an Insurer. According to her, SBLC provides a short-term guarantee (immediate and irrevocable) which allows the lender or lessor to cash-in an amount to the value of six to 36 months of payments ( in USD). READ ALSO: Nigerians paid N2.3trn as ransom in one year – NBS Report Lereece said that the payments were envisioned to include both rentals and maintenance reserves. She listed SBLC Security features to include, immediate availability and irrevocable funds, US Dollar settlement and further security in the form of confirming and or third-party insurance. She said that others were more entities that implied more security and fees, giving lessor or lender the ability to cure and continue or severe and repossess. “`Collateteralisation by the airline of a fraction of the agreed SBLC value may be required by the commercial banks, “ she added. According to her, airline pays commercial banks a single rate that embeds all fees including insurance where applicable while commercial banks pay lessor in the event of an issue. The director explained that commercial banks obtained SBLC insurance support from the confirming bank while the confirming bank obtained SBLC insurance support from the insurance provider. She further explained that the insurer provided insurance for the confirming bank or the commercial bank. READ ALSO: NULGE expresses frustration over delay in LGA financial autonomy Contributing, Mr Moor Ibekwe, Boeing Sales Director Africa Region Commercial Airplanes, said that the value of the SBLC, measured in payments due, could be six to 36 months for both rental and maintenance reserves. He explained “playout term“ as one-off or monthly according to the severity of the underlying issue. “Continued utilisation or restoration would be at the behest of the lessor or the lender, confirming bank support needed for the lease or loan traction. “Insurance support needed for the lease/ loan transaction while tenor is the period for which the SBLC must be available to the lessor or lender in the first five years of a 12-year lease“ he added. 

Air Peace Airfares: Keyamo lashes out at FCCPC

He says about the Federal Competition and Consumer Protection Commission (FCCPC): “We cannot have an agency of government floating all over the place, having all the powers. That means if there is problem with yam pricing, they will go and call the agricultural minister.” Mr. Festus Keyamo, the Aviation and Aerospace Development Minister lampooned the FCCPC for their lack of circumspection for coming to the media space to attack Air Peace without due regard to the effort the ministry is putting in to develop the aviation industry. Earlier this December, FCCPC had threatened to probe Air Peace over what it called “exploitative practices”, especially “significant price hikes for advance bookings on certain domestic routes” following consumer complaints. Mr. Keyamo, while appearing on Arise TV this Sunday, berated the FCCPC for their statement, calling it “very carless.” READ ALSO: What is the Arab Spring and How did it Start? “I think it was a very careless statement – I say that with all apologies – by the agency, without even consulting the core agency involved in regulation, which is the NCAA,” the Minister said. “We cannot have an agency of government floating all over the place, having all the powers. That means if there is problem with yam pricing, they will go and call the agricultural minister.” “They should have contacted the NCAA for them to look at the figures and the books which we have been doing, so we would have given them facts. But to single out a few airlines while we are struggling to expose them to the world for them to get more enhanced capacity was a bit careless,” Mr. Keyamo, SAN, reasoned.

Why Air Peace, Others Can’t Compete With Big International Airlines – Keyamo

The Minister of Aviation and Aerospace Development, Festus Keyamo, has said domestic airlines cannot compete with big international airlines because they don’t have access to aircraft on the same terms as them. Keyamo disclosed that the federal government is working with the Aviation Working Group on a practice direction to enable domestic airline operators to dry lease aircraft. In an interview on Arise Television on Monday, Keyamo revealed that some local operators had in the past breached the Cape Town Convention, which regulates aircraft leasing across the world. The minister said the Aviation Working Group, co-chaired by Airbus and Boeing, has said Nigeria would be blacklisted until it implements a law that would guide such from happening. He said: “Why we cannot compete with big international airlines is because we don’t have access to aircraft on the same terms as they have. People don’t know that the best airlines in the world run their fleet 100 per cent based on the actual purchase of aircraft. Recent studies show that 70 per cent of the fleet across the world is on dry leases. “For airlines that have bank facilities, they have access to loans in single digits, but our banks do 26 per cent. It was as a result of this that I called industry people to inform them that in order to survive, they must have access to these aircraft as those around the world. “So, I went around to enquire about what guides aircraft leasing around the world, and I discovered it was the Cape Town Convention, which regulates aircraft leasing across the world. And Nigeria is a signatory to that convention. We have signed and ratified that convention. “And there is a group responsible for the observance and compliance of that convention. The group is co-chaired by Airbus and Boeing. The group is called the Aviation Working Group, headed by Jeffrey Wool. “I called all of them and held a meeting to ask why our local operators are not getting these aircraft. According to them, they have blacklisted Nigeria because it didn’t comply with the convention. “The Aviation Working Group told me that until our laws are amended, until our practice directions are amended from granting injunctions on aircraft on dry lease, they will not bring aircraft in dey lease into Nigeria. “So, I told them I would do that. I spoke with the Attorney General of the Federation, the Chief Judge of the Federal High Court, the Chief Justice of Nigeria, the president and vice president, who is the head of the Ease of Doing Business; all of them have agreed that it is a critical issue. “We are in the process of drafting a practice direction to satisfy the Aviation Working Group that once we give a practice direction that says: ‘please, our judges, don’t grant injunctions to detain aircraft that are on dry lease in Nigeria because it gives us a bad image and it is against the Cape Town Convention of the Aviation Working Group’”.

Presidency Reacts As Air Peace Begins Lagos-London Flight Services

The Presidency has reacted to the commencement of the Lagos-London flight services by Air Peace. The airline, in a post via its X page on Saturday, March 30, 2024, announced that it had commenced its Lagos-London flight services. The airline expressed delight at the milestone and appreciated everyone who contributed to the success of the launch. Reacting to the development in an X post, presidential aide, Dada Olusegun congratulated the airline owner, Allen Onyeama for accomplishing this milestone that will have a massive impact on the economy of Nigeria. The presidential aide also said the move would improve the standard of service enjoyed by Nigerians via this Nigeria-London route and make ticket prices competitive for Nigerians. He wrote: “Here is congratulating Chief Allen Onyeama for accomplishing this milestone that will have a massive impact on the economy of Nigeria and also improve the standard of service enjoyed by Nigerians via this Nigeria-London route. – Pressure off our forex – ⁠Competitive ticket prices for Nigerians. “We are not where we want to be, but surely, we are not where we used to be. Slowly but surely, we will get there.”