ARIK AIR BUYS BOEING FLEET

C O N F I D E N T I A L LAGOS 000566 SIPDIS SIPDIS DEPARTMENT PASS TO FAA (AHARRIS) AND OPIC, TRANSPORTATION TO FAA; DAKAR FOR FAA REP MOIRA KEANE; ROME FOR TSA REP JOHN HALINSKI E.O. 12958: DECL: 08/09/2017 TAGS: EAIR EINV PREL NI SUBJECT: ARIK AIR BUYS BOEING FLEET REF: A. A. 2006 LAGOS 1269 ¶B. B. 2006 LAGOS 1075 ¶C. C. 2006 LAGOS 962 Classified By: Acting Consul General Donald McConnell for reasons 1.4 (D). ¶1. (U) Summary: Arik Air, a wholly Nigerian-owned airline, recently purchased a new Boeing 737-700 and announced USD 3 billion of orders for a Boeing 777, 787 Dreamliner, 15 737-800s; and four Q400 Bombardier aircraft. Arik's capitalization is unprecedented for a fully-owned Nigerian airline, however, industry insiders note the peculiarity of an airline acquiring aircraft before having developed a sound business plan. End summary. -------------- Arik and Boeing Business Booming -------------- ¶2. (U) On August 7, Arik Air celebrated its acquisition of a new Boeing 737-700, with an inaugural flight from Lagos to Abuja, followed by a press conference in Abuja. Arik began operations only ten months ago and has already acquired a fleet of state-of-the-art aircraft (Reftel A). During the press conference, Arik announced orders of USD 3 billion for a Boeing 777, Boeing 787 Dreamliner, 15 Boeing 737-800s, and four Q400 Bombardier aircraft. Arik's fleet consists of 16 aircraft based in Lagos. ¶3. (U) Because of its high volume of business with Arik, Boeing has assigned a technical advisor to Nigeria, Jeffrey Richards, to provide full-time support to the airline. Richards is establishing the computer-based portion of Arik,s in-house training program and assisting the Nigerian Civil Aviation Authority (NCAA) in modernizing its technical library. -------------- Technical and Safety Issues Cause Turbulence -------------- ¶4. (U) Arik planned to service 11 domestic routes as well as routes to the UK and U.S. It is one of three Nigerian carriers to receive GON rights to fly to the U.S.; the others are Virgin Nigeria and Bellview. Nigerian-registered aircraft are barred from flying to the U.S because Nigeria lacks FAA Category 1 status, however, Arik is exploring wet-lease options with other operators (Reftel B). ¶5. (C) In early 2007, two international oil companies (IOCs) conducted a technical audit of Arik, in which the airline failed. (Note: The IOCs conduct such audits to determine on which airlines their staff may fly. End note). In July, a U.S. FAA team conducted a technical audit of the NCAA, including a review of Arik Air, and found that Arik had been certified by the NCAA under previously-existing rules, which were laxer than the current requirements for certification. ¶6. (C) Richards and Boeing International Executive Director, Chamsou Deen Andjorin, reported the majority of Arik's fleet was sitting on the tarmac, not currently in service, and it was still hiring and training staff. Based on their knowledge, the representatives commented that Arik was the only airline to buy aircraft before developing a sound business plan. -------------- Comment -------------- ¶7. (C) Arik's owner, Joseph Arumemi-Johnson, and Chief Executive Officer, Michael McTighe, have been outspoken in their commitment to creating a safe, reliable, and profitable Nigerian airline. In contrast, aviation insiders opined that Arik has miles to go before it matches its impressive capitalization with serviced routes and standardized operating procedures. End comment. MCCONNELL