By Chinelo Obogo
Chief Executive Officer of Air Peace, Allen Onyema, has narrated how his airline was defrauded of $2 million by a foreign leasing company.
Speaking at the 29th annual conference of the League of Airport and Aviation Correspondents (LAAC), which held yesterday in Lagos themed: ‘Financing Aviation in Nigeria: Risks, Opportunities and Prospects’, Onyema said when this happened, he refused to pursue the case due to the fact that Nigeria was blacklisted for 12 years over breach of contract.
“A foreign company defrauded us of $2 million. Even when I knew they were going to do that, they said they wanted to buy aircraft parts, they knew why they needed $2 million. If I had stopped them from taking the money, Nigeria would have been further blacklisted. What you would be hearing is, ‘Oh, a Nigerian airline is unsafe.’ We told them we wanted to go and do a check on their aircraft, and they wanted us to continue flying their aircraft the way it was. That’s what you would hear, and they would further stigmatise your country.
“For the sake of everyone in the aviation industry in this country, I decided not to stop this transaction. I knew they were going to take the money and run away with it. The contract stated that if they didn’t deliver the aircraft parts, they must return the aircraft to the leasing company, but that didn’t happen. So, based on that, the company kept the aircraft. I was bothered by it. Somebody told me about it, but I didn’t listen to them, and they left. They never came back. They stole our $2 million. The Nigerian government got in touch with them. They said it was a private business matter and they would see what they could do, and they ran away with that $2 million.
“When my country was stigmatized, my country was blacklisted unofficially from accessing that because of not-so-good instances in the past, where Nigerian airlines did not pay the rentals, and when lessors came to repossess, they went to court. I’m not going to go into that because it’s not totally the fault of those airlines either. You need to understand why they went to court. So you have to be careful to protect your country. You have to protect your flag. That was a sacrifice that we made for the good of other airlines in this country. If we had seized that money, we wouldn’t have been able to access dry-lease opportunities, because it would have further compounded the problems of the aviation industry,” he said.
Onyema, who was a panelist during the conference, said that banks have become more strict in providing funding due to the fact that people lack integrity, where they borrow money and do not pay back. He said: “Over here, funding is very expensive, which is 35%. Even when you’re going at 35%, it’s not even available to everybody. You may be told, ‘I have to dig the grave of your grandmother and bring you the deed as collateral as soon as possible.’ You may have to sell your old village and bring us collateral. There are a lot of nuances, and these things are morally inefficient. So you see Nigerian airlines struggling. You have to amass a lot of wealth to go into it, and when you go into it, you need to sustain it. You need banks; you need financial institutions. But the conditions being imposed are very far from being helpful.
“However, the problem in this part of the world is lack of integrity. Why are banks asking us to bring your great-grandmother, bring all your land, and bring all your houses before they can lend money to you? It’s because in the past, some people have taken money from these banks. The only thing they did was help the banks to collapse because they didn’t pay it back. We come from a part of the world where people don’t regard money from banks properly. They think it’s nobody’s money and they just got it from a bank. When you take money and direct it to other purposes, other than what you borrowed the money for, that’s the fundamental problem. So we have to do what I call self-introspection. We look at ourselves first and tell ourselves the truth. We need to start showing some level of financial integrity to be able to get it right.
“In our own case, we may not have been where we are today if we didn’t imbibe and show that financial integrity and financial discipline. I’m not saying that it has been very easy, but over time, you need to. You need to show it for your bank to be able to trust you. We have done that. I can walk into any of the banks we use today, and I may not be told to bring everything I own as collateral. The Nigerian aviation sector has started being a little bit more liberal, but you need to earn it. You need to earn it, so we can talk from now until doomsday, the money won’t come. If you don’t do that self-introspection to maintain your credibility, you’re going to have problems. So what we have done is show that financial discipline and financial integrity. And today, it’s very easy.
If I want to invest in anything, I can pick up my phone and call the bank, and they will say, ‘How much do you need?’ That’s what is happening to us. So I want everybody also to imbibe that financial discipline and financial integrity.”
Onyema further said: “Another way is that the government can help by creating a window for the airline industry through the Central Bank of Nigeria or through the Bank of Industry. Egypt has done it. Some other countries have done it. You talked about the cost of acquiring dollars. Yes, very high. But the good thing this government has done for us is that it’s now stable. You can plan now, which is a plus for the aviation sector today. However, at the Central Bank level, they can create a window for airlines to acquire dollars at a slightly cheaper rate, because we are operating from a disadvantaged position when you operate from Nigeria.
“However, I must say this: the federal government has done something very good for this country in the aviation sector. The dry-leasing they’ve been able to afford the airlines is going to be a game-changer for all the airlines in this country, and I must applaud the president. So when you talk about financing, you have to also talk about indirect support. This country was unofficially blacklisted, but for the first time in 12 years, in the next two weeks, this country will witness the first dry-lease aircraft.
“Remember, all these big airlines you hear about — Delta, Emirates, and others — don’t own all those planes. They’re dry-leased aircraft. The biggest leasing companies in the world buy these planes and give them to the airlines to be operated. That’s why you see some of these airlines operating about 1,000 aircraft, 800 aircraft. You cannot do that with wet-lease. You cannot be operational solely on wet-lease. It’s very expensive.”
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