Abu Dhabi, UAEThursday 18 July 2019

Boeing 737 Max comeback depends on transparency and reviving confidence, Air Peace says

Exclusive: Lagos-based carrier says it's too 'premature' to make decision on its Max order with the narrowbody jet grounded globally

Lagos-based carrier Air Peace is expanding its operations to serve Nigeria's large population of nearly 190 million. Courtesy Air Peace. 
Lagos-based carrier Air Peace is expanding its operations to serve Nigeria's large population of nearly 190 million. Courtesy Air Peace. 

Nigeria's Air Peace, a customer of the Boeing 737 Max, said the US plane maker must restore the flying public's confidence and be transparent in the changes it makes to fix the grounded jet before it flies again.

The Lagos-based carrier is waiting to see how Boeing will handle the fixes before it makes a decision on its order of 10 of the Max 8 narrowbodies due for delivery in 2024, Allen Onyema, chairman and chief executive of Air Peace, told The National.

"For now the order still stands, we are not saying we will cancel or not cancel because its very premature, we want to wait," Mr Onyema said in Dubai. "If things are rectified, Boeing must make sure that everything is transparent and the public confidence that waned is restored."

Allen Onyema has big ambitions for the airline
Air Peace CEO Allen Onyema says the carrier is planning long-haul expansion. Courtesy Air Peace

Boeing is facing mounting pressure as carriers reconsider or cancel their orders of the 737 Max after the plane was involved in two deadly crashes that killed 346 people. The crashes in Ethiopia and Indonesia triggered a global grounding of the jet in March, and the timeline for its return to the skies is still unclear. This week, Saudi Arabia's budget carrier flyadeal scrapped its commitment for up to 50 of the Max aircraft in favour of the competing Airbus A320 Neo model.

Air Peace currently operates the older model of 737 jets and signed an order for the newer Max planes in September 2018.

"For now we have not been advised as to the status of the Max aircraft but we believe Boeing has capacity to sort it," Mr Onyema said.

Earlier this year, the carrier also signed a firm order for 10 Embraer E195-E2 planes, with purchase rights for 20 more.

Mr Onyema said Air Peace, owned and founded by the CEO, may exercise its purchase rights for the 20 additional Embraer planes by the end of the year to expand its domestic and African routes.

"We need those Embraers, they’re very beautiful planes," he said. "We may call up those rights very soon - there are so many places [to serve] in Nigeria, west and central Africa and down to the southern part of the continent."

Deliveries of the 10 E195-E2 planes will start next year and will be deployed to domestic, African and Southern European destinations, he said. The carrier won rights to fly to Congo and Cameroon with services to Gabon starting before the end of the year.

Air Peace will finance its upcoming aircraft deliveries through loans from national banks and its own revenues, Mr Onyema said. The airline will require about $500 million (Dh1.8 billion) this year for aircraft financing.

Operating a mixed fleet of 25 aircraft including Boeing 737s and 777 widebodies, Embraer ERJ145 regional jets and Dornier 328 planes, Air Peace plans to grow its fleet to 45 aircraft as the new Embraers join in 2020.

The full-service carrier, which was established in October 2017, has ambitions to expand with more long-haul routes after it launched a service to Sharjah last week.

Next in its plans are flights to Mumbai, Guangzhou and Johannesburg before the end of 2019, Mr Onyema said. Services to London and Houston are scheduled for the first quarter of 2020 using Boeing 777 widebodies.

The carrier has ambitions to grow domestically and internationally given the Nigerian market's large population, approaching 190 million people, served predominantly by domestic airlines.

"In the next two to three years Air Peace must be solidly established to compete with other bigger airlines within Africa and outside - we have the population to make it happen," Mr Onyema said.

Nigeria has mainly been served by long-haul foreign carriers such as Dubai-based Emirates due to few homegrown competitors operating international flights.

"I'm not saying we'll be like Emirates or Delta but we shall have our own market and it will be solid. So we need to ensure our service is top-notch, our financial discipline intact and safety records top-notch."

To fuel its long-haul plans, Air Peace is scanning the market for pre-owned widebody jets such as including the Boeing 787 Dreamliner and more 777s.

"If we don’t get the young pre-owned aircraft we are looking for then within the next year we will make an order for brand new widebodies, 787s and 777s," he said.

The rise in oil prices that has lifted Nigeria's economic recovery and provided the aviation sector with with growth opportunities is also a major challenge for its airlines.

Fuel costs comprise 60 per cent of Air Peace's total costs and has slashed revenues, Mr Onyema said.

Government action to provide access to bank loans with lower interest rates and cheaper jet fuel by reducing import duties would help support Nigerian airlines, he said.

Air Peace carried 3 million passengers last year and expects to exceed that in 2019 but not breach the 4 million mark as several of its aircraft are scheduled for maintenance checks at the same time, he said.

In 2020, Air Peace projects it will more than double the number of passengers carried to about 7 or 8 million people as it introduces more long-haul services and gets deliveries of more aircraft.

The airline is open to investors and partnership opportunities if they are also mutually beneficial to Nigeria and the airline, Mr Onyema said.

Updated: July 11, 2019 02:56 PM

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