At least one airline plans to profit from Nigeria’s recession.
The country’s economic downturn has hobbled operations of almost all local and foreign carriers as lower oil prices have resulted in a dearth foreign exchange. Nigeria’s oldest working airline has suspended operations indefinitely while foreign airlines have either pulled out of Nigeria or are considering doing so.
Arik Air, Nigeria’s biggest airline, is taking advantage of others’ woes and expanding its routes, plugging gaps created by these exits, Reuters reports. The airline plans to start daily flights to New York within the next two years; it’s currently flying to New York three times a week. It also plans to add new international routes, including to Rome and Paris, which will generate more foreign exchange revenue.
To finance expansion, Chris Ndulue, Arik Air CEO, says the company plans to raise a total of $1 billion through a private share placement next year and an initial public offering (IPO) “one year or 18 months down the line.”
Arik’s plans for expansion belie its recent troubles. Amid a cash crunch, the airline was forced to shutter operations for almost 24 hours last month over a failure to secure insurance documentation. Arik’s planned international expansion will likely raise more questions over its questionable customer service. More than half of its flights in the first quarter of 2016 were either delayed or cancelled. In one instance, passengers say they were delayed for more than 24 hours without provision for accommodation and food.