Nigeria’s first recession in decades has claimed its first business casualty. Aero Contractors, the country’s oldest working airline, has grounded its flights. Established in 1959, the airline is suspending operations indefinitely, starting today (Sept. 1).
The decision is “a result of the current economic situation” as Aero has faced “grave challenges in the past six months,” said Fola Akinkuotu, the airline’s CEO.
Nigeria’s economic woes, mostly down to a dollar crunch and a drop in oil earnings and exports, have been particularly hard on the aviation industry. Because of the dollar shortage, oil marketers say they are unable to import aviation fuel. As a result, local airlines have been hit with severe fuel shortages, causing mass flight delays and cancellations.
Without a solution in sight, the Nigerian Civil Aviation Authority advised local airlines to “cut down their operations.” International airlines have also been affected. In May, United Airlines canceled its Nigerian flights, citing difficulties repatriating its dollar profits amid the government’s tight currency controls.
Aero’s decision to close shop worsens the gloomy outlook on Africa’s largest economy as the government starts adjusting policies to steer out of the recession. After firing 100 workers in April, the airline’s entire staff, estimated to be more 1,000 people, have now been put on an indefinite leave of absence, adding to the country’s climbing unemployment rates.
The airline will restore operations in the future if conditions permit, Akinkuotu said.
Sign up for the Quartz Africa Weekly Brief — the most important and interesting news from across the continent, in your inbox.