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IATA Sees $29.8b Revenue For Global Carriers

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  • IATA Sees $29.8b Revenue For Global Carriers

The International Air Transport Association (IATA) says it expects the global airline industry to make a net profit of $29.8 billion next year.

Its Director-General and Chief Executive Officer, Alexandre De Junaic said the profitability projection could, however, be hampered by rising oil prices, cost control as well as cut-throat competition.

He said the projected figure puts total revenues at $736 billion, representing a 4.1per cent margin over the performance of this year, with airlines expected to make a return on invested capital of 7.9 per cent.

This is just as African carriers are expected to deliver the weakest financial performance with a net loss of $800 million.

The region’s weak performance, according to Juniac, is driven by regional conflict and the impact of low commodity prices.

He said the capacity for African carriers next year is expected to grow by 4.7 per cent as opposed to the demand growth hovering around 4.5 per cent.

Juniac said: “Airlines continue to deliver strong results. This year we expect a record net profit of $35.6 billion. Even though conditions in 2017 will be more difficult with rising oil prices, we see the industry earning $29.8 billion. That’s soft landing and safely in profitable territory. These three years are the best performance in the industry’s history—irrespective of the many uncertainties we face. Indeed, risks are abundant— political, economic and security among them. And controlling costs is still a constant battle in our hyper-competitive industry.

“We need to put this into perspective. Record profits for airlines means earning more than our cost of capital for most other businesses that would be considered a normal level of return to investors. But three years of sustainable profits is a first for the industry. And after many years of hard work in restructuring and re-engineering the business, the industry is also more resilient. We should also recognise that profits are not evenly spread with the strongest performance concentrated in North America.”

He said expected higher oil prices will have the biggest impact on the outlook for next year for global carriers as jet fuel price is expected to account for 18.7 per cent of the industry’s cost structure .

He said: “The demand stimulus from lower oil prices will taper off in 2017, slowing traffic growth to 5.1 per cent. Industry capacity expansion is also expected to slow to 5.6 per cent.

“Capacity growth will still outstrip the increase in demand, thus lowering the global passenger load factor to 79.8 per cent.

“The negative impact of a lower load factor is expected to be offset somewhat by a strengthening of global economic growth. World GDP is projected to expand by 2.5 per cent. Along with structural changes in the industry. This is expected to help stabilise yields for both the cargo and passenger businesses.’’

This is a welcome development as yields have fallen each year since 2012.
“There is some optimism over the prospects for the cargo business in 2017. The break in falling yields and a moderate uptick in demand will see cargo industry volumes reach a record high of 55.7 million tonnes.

“Industry revenues are expected to rise slightly to $49.4 billion. Trading conditions remain challenging.”

He lamented that governments, however, do not make aviation’s work easy, adding that the global tax bill has ballooned to $123 billion. Over 60 per cent of countries put visa barriers in the way of travel; and the total number of ticket taxes exceeds 230.

“Billions of dollars are wasted in direct costs and lost productivity as a result of inefficient infrastructure. These are only some of the hurdles which confront airlines. Our aim is to work in partnership to help governments better understand and fully maximise the social and economic benefits of efficient global air links.

“ Carriers in Africa are expected to deliver the weakest financial performance with a net loss of $800 million. For each passenger flown this amounts to an average loss of $9.97. Capacity in 2017 is expected to grow by 4.7 per cent , ahead of 4.5 per cent demand growth. The region’s weak performance is being driven by regional conflict and the impact of low commodity prices,” he said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Tony Elumelu Acquires Shell, Total, ENI Stakes in OML 17

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Tony Elumelu Acquires Shell, Total, ENI Stakes in OML 17

Tony Elumelu owned Heir Holdings Limited and its related company Transnational Corporation of Nigeria Plc on Friday announced it has completed the purchase of 45 percent stake in Oil Mining Lease (OML 17) through TNOG Oil and Gas Limited.

The acquisition includes all assets of Shell Petroleum Development Company of Nigeria Limited (30 Percent), Total E&P Nigeria Ltd (10 percent) and ENI (five percent) — in the lease.

It was further stated that TNOG Oil and Gas Limited will also have the sole right to operate OML 17.

The field presently has a production capacity of 27,000 barrels per day. Also, there are estimated 2P reserves (proven and probable) of 1.2 billion barrels and an additional one billion barrels in possible reserves — all of oil equivalent.

A consortium of global and regional banks and investors provided a financing component of $1.1 billion for the largest oil and gas financing in Africa in over a decade.

In a statement released on Friday, Shell said the completion was after all the necessary approvals have were received from authorities.

“A total of $453m was paid at completion with the balance to be paid over an agreed period. SPDC will retain its interest in the Port Harcourt Industrial and Residential Areas, which fall within the lease area,” the SPDC said.

Speaking after the completion of the deal, Elumelu said “We have a very clear vision: creating Africa’s first integrated energy multinational, a global quality business, uniquely focused on Africa and Africa’s energy needs. The acquisition of such a high-quality asset, with significant potential for further growth, is a strong statement of our confidence in Nigeria, the Nigerian oil and gas sector and a tribute to the extremely high-quality management team that we have assembled.

“As a Nigerian, and more particularly an indigene of the Niger Delta region, I understand well our responsibilities that come with stewardship of the asset, our engagement with communities and the strategic importance of the oil and gas sector in Nigeria. We see significant benefits from integrating our production, with our ability to power Nigeria, through Transcorp, and deliver value across the energy value chain.

“I would like to thank Shell, Total and ENI, for the professionalism of the process, the Federal Government of Nigeria, the Ministry of Petroleum Resources, and the NNPC for the confidence they have placed in us.”

Tony Elumelu is the Chairman of Heirs Holdings Limited, Transcorp and United Bank for Africa Plc.

Also, read Transcorp Plc Acquires FGN’s 100% Equity in Afam Power for N105 Billion

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Exporters Say CBN Pre-export Requirements is Frustrating Export of Goods

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Exporters Say CBN Pre-export Requirements is Frustrating Export of Goods

Exporters have said the recently introduced pre-export requirements by the Central Bank of Nigeria is creating unnecessary bottlenecks for exporters and the movement of goods out of the country.

Exporters, who spoke under the aegis of the Network of Practicing Non-oil Exporters of Nigeria (NPNEN), said the electronic Nigeria Export Proceed Form now required by financial institutions from exporters had come with so many challenges.

Ahmed Rabiu, the President, NPNEN, explained that the new policy had several requirements that often led to delays and loss of income on the part of exporters.

He said, “We acknowledge the CBN’s desire to ensure that all exports out of Nigeria are documented in order to ensure that the proceeds of such exports are repatriated.

“However, the reality on the field shows that the process is causing undue delays and consequently, encouraging corruption.

According to them, in the new pre-export requirements, the Central Bank of Nigeria wants an export transaction to be initiated through eNXP processing on the trade monitoring system.

After which exporters are expected to have a pre-shipment inspection agent, the Nigeria Customs Service and other designated government agencies carry out their pre-export inspections.

The exporters said the pre-shipment inspection agent was expected to issue a clean Certificate of Inspection while Customs would issue the Single Good Declaration. All these they said takes time and delay goods from leaving the country on time.

Pointing to a recent report, they said about N868 billion worth of goods bound for export were stuck at the ports due to the new policy.

Speaking further Rabiu said, “For example, for the PIA to issue the CCI, the exporter is required to upload a certificate of origin as one of the supporting documents for the eNXP.

“The PIA is also required to upload the CCI to the TRMS(M) and until this is done, the Customs service will not issue the Single Good Declaration.”

He added, “After issuing the SGD, the customs is further required to upload it into the TRMS before the goods are allowed to be gated into the port and loaded on the vessel by the shipping line.

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Ardova Plc in Talks to Acquire Enyo Retail and Supply Limited

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Ardova Plc in Talks to Acquire Enyo Retail and Supply Limited

Ardova Plc, Nigeria’s leading integrated energy company, has commenced discussions to acquire Enyo Retail and Supply Limited.

According to the statement issued and signed by Oladehinde Nelson-Cole, Ag. Company Secretary/General Counsel, Ardova Plc, Enyo is one of the newest and fastest-growing retail and supply companies in the downstream sector.

It stated, “This announcement is pursuant to the acceptance in principle of AP’s offer and acquisition framework by the shareholders of Enyo, it is subject to the successful completion of a due diligence exercise and the receipt of all required regulatory approvals.”

“This announcement is pursuant to the acceptance in principle of AP’s offer and acquisition framework by the shareholders of Enyo, it is subject to the successful completion of a due diligence exercise and the receipt of all required regulatory approvals.

Speaking on the yet to be completed deal, Mr. Olumide Adeosun, CEO, Ardova Plc, said upon completion, Ardova will retain the Enyo branded stations which will operate side by side with the Ardova brand while simultaneously leveraging on the strengths of Ardova and its group companies.

He added that the two companies are determined to conclude the deal by the end of Q1 2021.

Enyo presently operates over 90 stations across the nation and attends to over 100,000 retail customers on a daily basis.

Ardova Plc and Enyo Retail & Supply Limited promised to furnish stakeholders with more information on the progress of the deal.

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