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FG Still Eyes Arik, Aero as Fulcrum for National Carrier

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Airline
  • FG Still Eyes Arik, Aero as Fulcrum for National Carrier

Despite the process currently going on to create a national carrier, the federal government still hopes to establish the new airline on the foundation already laid by Arik Air with technical support from the maintenance section of Aero Contractors.

According to informed source from the industry, it would be a lot easier to build the national airline on the operations of Arik Air, which is currently under the management of Asset Management Corporation of Nigeria (AMCON) along with Aero Contractors than to establish an entirely new airline.

The source said that establishing a new airline from the scratch would take a longer time and might not be realised before the termination of the current administration.

The federal government early last year established transaction advisers for a new national carrier and also for the concession of the nation’s major airports.

Checks showed with the advancement made by Aero Contractors in establishing a maintenance facility for Boeing B737 classics and working on upgrading to conducting maintenance on New General Boeing B737 aircraft types, which is the aircraft largely in the fleet of Arik Air, it would be easy to marry the two airlines and form the basis for the establishment of a national carrier.

Although it is not yet confirmed by the Minister of State, Aviation, Senator Hadi Sirika, but investigation revealed that the federal government may work with Qatar Airways as core investor for the new national airline and if it goes as planned, the Middle East airline would supply the new carrier most of its large-body aircraft to commence operations to international destinations.

However, many airline owners currently in operation are not positively disposed to Nigeria establishing a national carrier because they believe government would favour it against them and this would drastically affect the market, as most of the passenger traffic would be mopped by the new airline, which would enjoy government’s support with waiver in charges and many other favorable considerations.

Investigation revealed that the owners of Aero and Arik, which are currently under the management of AMCON, have muted that they would sue the federal government if their interests are not met in the plan to establish a national carrier.

Also AMCON may not be disposed to incorporating Arik Air and Aero into the national carrier project because the Corporation is disposed to recovering its huge funds sunk in the two airlines and there would be no guarantee that these funds would be recovered when the two airlines metamorphose to a national carrier with a core investor and private sector driven management and ownership with little government stake, as enunciated by Sirika.

AMCON had earlier indicated that its management had severally turned down the request to use the two airlines as national carrier, arguing that the debt overhang in the airlines would not make such start up feasible because this means that the new airline would be laden with debts at inception.

Besides, AMCON said that it was more interested in recouping the whooping funds projected to between N16 to N20 billion expended on Aero and about N190 billion on Arik to save them from sinking and to sustain their operation.

Industry consultant and CEO of Belujane Konsult, Chris Aligbe, who is fully in support of establishing a national carrier, said to a large extent, the federal government has been very transparent in the process of establishing a national carrier; unlike in the past when negotiations were done under the table.

On the adoption of Aero and Arik Air, Aligbe said the federal government cannot use the airlines without involving their owners, so if they sue government it might obstruct the plan to establish the national airline or delay its emergence.

On the opposition of the current domestic airlines to a national carrier, Aligbe said that he does not think that the airlines would have the locus to go to court and stand down the plan for a national carrier; rather, they could seek that whatever privileges given to the new national airline should be extended to them.

“They can go to court and seek for equal privileges because favouring one airline against others will be anti-competition,” Aligbe 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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Oil Prices News: Oil Gains Following Drops in US Crude Inventories

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Oil Prices Gain Following Drops in US Crude Inventories and OPEC High Compliance Level

Global oil prices extended their 2 percent gains on Thursday after data showed U.S crude oil inventories declined last week.

The price of Brent crude oil, against which Nigerian oil is measured, gained 0.2 percent or 7 cents to $43.39 a barrel as at 12:10 pm Nigerian time. While the U.S. West Texas Intermediate (WTI) crude appreciated by 8 cent or 0.2 percent to $41.12 barrels.

Oil prices extended their three days gain after the American Petroleum Institute said the U.S crude inventories declined by 5.4 million barrels in the week ended October 9.

The report released after the market closed on Wednesday revealed that distillate stockpiles, which include diesel and heating oil, declined by 3.9 million barrels. Those stated drawdowns almost double analysts’ projections for the week.

Much of the fall is due to the effects of Hurricane Delta shuttering U.S. production in the Gulf of Mexico, and as such, will be a transitory effect,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.

“Therefore, I am not getting too excited that a turn of direction is upon markets, although both contracts are approaching important technical resistance regions.”

Also, the report that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, referred to as OPEC+ attained 102 percent compliance level with their oil production cuts agreements bolstered global oil outlook. Suggesting that demands for the commodity are likely not growing and could drag down prices in few weeks, especially when one factor in the reopening of Libya’s Sharara oil field, workers returning to operation in Norway and the Gulf of Mexico.

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Oil Prices Gain on Tuesday Despite Expected Surge in Global Oil Supplies

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Oil Prices Rise Despite Expected Surge in Global Oil Supplies

Oil prices gained on Tuesday despite Libya opening Sharara oil field for production, labour in Norway reaching an agreement with oil firms to return back to work and oil workers in the U.S returning to the Gulf of Mexico region after the Hurrican Delta.

Brent crude oil, against which Nigerian oil price is measured, gained 1.77 percent to $42.46 per barrel as at 11:15 am Nigerian time on Tuesday.

While the US West Texas Intermediate (WTI) crude oil gained 2 percent to close at $40.22 per barrel.

The improvement in prices was after oil prices plunged as much as 3 percent on Monday following a resolution reached by Libyan rebels and government to commence oil production at the nation’s largest oil field, Sharara Oil Field.

This coupled with labour agreement with oil firms in Norway was expected to boost global oil supplies and eventually weighed on prices and disrupt OPEC+ production cuts strategy.

However, prices surged after Nancy Pelosi said she would commence talks on $1.8 trillion stimulus package following President Trump’s return to the White House after he was rushed to hospital following a positive COVID-19 test.

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Joe Biden Win Could Boost Oil Prices, Says Goldman Sachs

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Oil Prices to Surge Once Joe Biden Wins -Goldman Sachs

Goldman Sachs, one of the world’s largest investment banks, has said Joe Biden win could boost global oil prices despite weak global economic outlook and COVID-19 negative impacts on the world’s growth.

The investment bank, however, remains bullish on both oil and gas prices regardless of the election outcome in November.

The bank sees oil and gas demand rising enough in 2021 to supersede election results but explained that Biden win could bolster prices by making production more expensive and more regulated for producers in the U.S.

In a note written by the bank’s commodities team on Sunday, it said “We do not expect the upcoming U.S. elections to derail our bullish forecasts for oil and gas prices, with a Blue Wave likely to be in fact a positive catalyst.”

“Headwinds to U.S. oil and gas production would rise further under a Joe Biden administration, even if the candidate has struck a centrist tone.”

Goldman Sachs explained that if incumbent, Trump, is re-elected with pro-oil and gas policies in place that “its impact would likely remain modest at best,” Goldman’s analysts wrote, “given the more powerful shift in investor focus to incorporate ESG metrics and the associated corporate capex re-allocation away from fossil fuels.”

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