Nigeria’s airline operator, Air Peace, has signed a billion dollar deal with Brazil’s plane manufacturer, Embraer SA.
The deal comes at a time countries are grounding Boeing‘s Max model – the same model Air Peace ordered in 2018 to boost its fleet.
How much the deal is worth: Air Peace signed a $2.12 billion deal with Embraer SA that will see the Nigerian airline operator take delivery of ten E195-E2 jets at an unspecified date. The Brazilian plane maker will include the order in its backlog for the second quarter of 2019, the company said.
Is Air Peace seeking an alternative to Max model?: The deal is likely to be an alternative to embattled Boeing 737-Max 8 and 9 model, as Embraer SA‘s E195-E2 jets is in direct competition with Airbus A220, Airbus A320neo and Boeing‘s Max model.
While Air Peace didn’t state if the decision to order for Embraer SA‘s E195-E2 jets is connected to a possible loss of trust in the American plane maker, ordering jets from a direct competitor is a signal.
Air Peace’s romance with Boeing
After the Ethiopian Airways crash which killed 157 passengers, Air Peace said it had no intention in cancelling its order of the Boeing 737-Max model despite the deadly crash being the second in the space of five months for the Max model – with the Lion Air crash, which killed 189 passengers, being the second.
First, it was the spokesman for Air Peace, Chris Iwarah, who described the call to cancel the order as premature. He argued that before the public rush into conclusion, it’s advisable to wait until the investigation into the crashes is concluded.
Then, the Chairman of Air Peace, Allen Onyema second Iwarah’s opinion while taking delivery of its third Boeing 777-300 aircraft. Onyema said it ordered for the embattled aircraft long before the technical issue arise because the plane was the toast of the global aviation industry, and it’s only normal for the company to align with such development.
I disagree with the premise of this write up because the E195-E2 aka profit-hunter is a vastly different aircraft to the B 737 MAX.
From my own viewpoint, in Air Peace service the E2’s 132 passenger load and 2600 mile range(flight endurance) means it is not likely to fly beyond the northern shores of Africa.On the other hand,the B 737 Max has a passenger load of 190 and range of 3,600 miles which allows it to reach some of Asia and most of Europe from Lagos.
As an example, Air Italy operated the B 737 Max 8 to Lagos from Milan before the global grounding.
If we go back in Nigerian aviation history, Virgin Nigeria used a somewhat similar fleet combination when they operated with a narrow body fleet of E 195 aka E2 classic version and B 737-300 Classic.
Yes, there are many routes where E2 and 737 Max can compete side by side.
However, all things considered, specifically traffic and revenue measurement, I would be shocked if those kinds of routes are the sole reason why Air Peace ordered those 737 Maxes in the first place.
On a wider note, with their current fleet of about 13 B 737 Classic and 6 Embraer ERJ 145, Air Peace operates to the following destinations:
Lagos, Abuja, Port Harcourt, Uyo, Calabar, Benin, Owerri, Akure, Yola, Kano, Asaba, Kaduna, Accra,Banjul, Dakar, Freetown and Monrovia Roberts.
By the time they induct all their publicly announced and planned aircraft and grow to a fleet of approximately 70 aircraft (13 B 737 Classic, 10 B 737 Max 8, 10 (30 if all options are taken) E 190-E 2, 6 ERJ-145, 2 B 777-200 and 2 B 777-300), I expect that :
i.Provided Air Peace receive the support they need to build a solid hub network based out of Lagos and or Abuja
ii.Provided Air Peace stay professional and incorruptible (especially in form of being tempted into drug smuggling by crews and non payment of overseas bills by management)
iii.Provided Nigerian pull him down syndrome does not come in from other sector players
iv.Provided the Nigerian Aviation Ministry helps the Nigerian aviation industry to play good international aero politics
v. Provided their love story with Fidelity Bank does not go sour, as the Bank have been wonderful with financing for all the recent big ticket spending by Air Peace.
Air Peace too have apparently been a good customer so we hope it stays so.
vi. Provided Nigeria can maintain a semblance of seriousness as a safe and secure economic sovereign, their destination list in the next 5 to 7 years should cover at least 4 continents and appear something like this:
B 777: Shanghai,Delhi,Hong Kong,Hanoi(Vietnam),Dubai,Dublin,New York JFK,Sao Paulo Guarulhos(future)
B 737 CLASSIC/NG/MAX 8: Lagos, Abuja, Port Harcourt, Uyo, Calabar, Benin, Owerri, Akure, Yola, Kano, Asaba, Kaduna, Accra,Banjul, Dakar, Freetown,Monrovia Roberts (all existing), Johannesburg, Casablanca, Nairobi, Mauritius,Luanda, Birmingham, Glasgow, Manchester,Brussels,Amsterdam, Lisbon, Barcelona, Paris Orly,Dubai, Sharjah, Jeddah, Riyadh, Tel Aviv (future)
E195-E2/ERJ145: Dar es Salam,Harare,Khartoum, Windhoek,Cairo, Tripoli, Istanbul Sabiha Gockhen, Marrakech, Sokoto, Minna, Ibadan, Makurdi, Douala, Abidjan, Libreville, Malabo, Luanda, Brazzavile, Cotonou, Conakry, Kumasi (all future)
I also expect a future order from Air Peace for about 8 more B 737 Max 8 or 10 end of production (brand new but heavily discounted) B 737-800 NG to replace the existing B 737-300/500 Classics for reasons of maintenance and cockpit commonality (737 NG and 737 Max are certified as same aircraft, 737-300/500 Classic is treated as different airplane).
Operating a network like this should positively contribute no less than US$500 million/year to Nigeria’s national forex earnings.
If Nigeria can create another 10% of the above figure as tourism inflows from the approximately 6-7 million passengers a year this network should be able to generate, that is a potential US$50 million/year market.
Government should start doing it’s own emergency spending to support the private sector’s efforts.
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Between Air Peace and Green Africa Airways, Nigerian airlines have committed to spend about US$10 billion on almost 180 new aircraft over the next decade.
Can our existing and planned airport infrastructure handle that?
Are we even trying to create an environment to protect and grow these investments?
I don tire to talk.
Awesome and in-depth review.