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European Ministers Consider Boosting Bailout Fund

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Euro-zone finance ministers face one big question when they meet in Brussels today and tomorrow: Are they willing to fundamentally change their strategy for solving the debt crisis that has rocked the currency bloc over the past year?

Over the past week, calls to boost the euro zone’s euro750 billion ($1 trillion) bailout fund by expanding its size and — perhaps more importantly — by giving it broader powers have grown louder.

French Finance Minister Christine Lagarde told journalists Friday that she and her counterparts were discussing giving the fund the power to buy government bonds on the open market — a move that would take pressure off countries that have seen bond prices fall and funding costs rise. Belgium’s Finance Minister Didier Reynders, meanwhile, said the size of the fund should be doubled, to euro1.5 trillion ($2 trillion).

Jean Claude Trichet, the head of the European Central bank, and two top officials of the European Union’s executive commission have also thrown their weight behind a new role for the bailout fund, which has so far been limited to providing rescue loans to cash-strapped countries.

The European Commission last week circulated a document among EU member states with some suggestions on how to broaden the scope of the fund beyond bailouts. But an EU official familiar with the document said talks were still at an early stage and that he didn’t expect finance ministers to take big any big decisions next week.

“The meeting will not achieve such a degree of detail,” said the official, who was speaking on condition of anonymity because of the early stage of the discussions.

Most analysts say the euro zone’s current strategy to deal with the crisis has failed. That strategy sees countries bail out their struggling banks to then provide them with expensive rescue loans, conditioned on steep budget cuts, when they run out of money.

A euro67.5 billion bailout of Ireland — necessary after massive capital injections for big banks pushed the country’s budget deficit to almost one-third of economic output — didn’t succeed in containing the crisis. Greece, which received a euro110 billion rescue loan, was last Friday downgraded by another rating agency, reflecting concern about the country’s ability to pay off its debt amid a shrinking economy and falling government revenue.

Most economists expect Portugal to also ask for help soon, while markets are worried about the financial health of much larger Spain. Spain’s economy makes up about 10 percent of the euro zone’s gross domestic product and bailing it out could easily overwhelm the existing facility.

“Maybe now they should see one needs a new approach,” Daniel Gros, director of the Brussels-based Centre for European Policy Studies and a former economist for the International Monetary Fund, said of European policymakers’ scramble to stop the crisis from spreading. “It’s not so much the size of the fund, but what it’s used for.”

Giving the bailout fund broader powers, such as directly intervening in financial markets in times of turmoil, or even providing short-term cash injections to re-capitalise wavering banks could attack the crisis at its roots, analysts say.

One big part of this new approach would be to let banks’ debtors take losses if a firm is actually insolvent, and then quickly spend large sums of money buying up government and bank bonds to stop panic on financial markets, Gros said.

Germany so far has opposed significantly increasing the firing power of the existing bailout fund. But German Finance Minister Wolfgang Schaeuble has raised the option of boosting the lending capacity of the euro zone’s contribution to the fund so it actually reaches the advertised euro440 billion ($580 billion).

Euro-zone governments make their contribution to the euro750 billion fund by guaranteeing loans issued by the so-called European Financial Stability Facility. The remaining euro310 billion of the total fund comes from the EU’s executive Commission and the IMF.

However, because of the way the EFSF provides money to cash-strapped countries, it can actually lend out much less than euro440 billion. Rather than giving direct loans, the facility sells bonds to investors, with the proceeds going to the government in trouble.

To get a triple-A credit rating for those bonds — and make them attractive to wealthy investors — governments committed to guarantee 120 percent of their value, taking the amount it can actually lend out down to about euro367 billion. On top of that, bailed out countries have to deposit a certain portion of the loans they receive “as a cash buffer” with the fund.

Schaeuble said boosting the fund so it can actually lend out euro440 billion would not represent an actual increase and Berlin has ruled out doing anything beyond that.

But analysts warn that the way the crisis had developed, governments might soon be force to go further.

“We do these things only after we have denied even thinking about them,” said Gros.

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NSIB, AAAU Sign MoU On Air Safety Training

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As part of efforts to curb mishaps in the aviation industry, the Nigerian Safety Investigation Bureau (NSIB) has signed a Memorandum of Understanding (MoU) with the African Aviation and Aerospace University (AAAU) to deepen training on preventing and reducing accidents in Nigeria’s air transport.
Director, Public Affairs and Consumer Protection of NBIS, Mrs Bimbo Olawumi Oladeji, in a statement, said NSIB granted AAAU access to its facilities to facilitate an efficient exchange of resources and expertise.
According to the statement, the Director-General/Chief Executive Officer of NSIB, Captain Alex Badeh, who spoke at the ceremony held at the NSIB Training School, noted that the MoU sets the stage for facility sharing, capacity building, and collaboration between the Bureau and AAAU.
“I am confident that this MoU will enhance the effectiveness of our collaboration and commitment to promoting safer skies and operational excellence in the aviation industry in Nigeria and beyond”, Badeh said.
Registrar of AAAU, represented by the Director of Physical Planning and Works, Engineer Masud Aliyu Yerima, was also quoted in the statement, saying, “The journey of AAAU’s establishment and progress would have faced considerable challenges without NSIB’s generous support”.
He commended Badeh for his exemplary leadership and steadfast dedication in propelling NSIB to greater heights, and affirmed AAAU’s readiness to engage in mutually beneficial endeavours with NSIB.
“This partnership marks a significant milestone in fostering a culture of safety and excellence within Nigeria’s aviation sector, and both NSIB and AAAU are poised to leverage this synergy for the benefit of the industry and the nation at large.
“The African Aviation and Aerospace University, AAAU, is the first Pan-African university dedicated to aviation, aerospace, and environmental science.
“Addressing two critical needs within the continent’s industry, AAAU tackles the research and development gap in Africa’s aviation and aerospace sector while simultaneously cultivating a skilled workforce to propel it forward”, the statement added.

By: Corlins Walter

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Naira Rebound, Air Peace’s Expansion Deepens International Route Competition 

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he commencement of flights operations on the London route by an indegenous Carrier, Air Peace Airline, and the recovery of the local currency have sparked fresh competition on international routes.
Air Peace, Nigeria’s outstanding indigenous airline, may face a prolonged market battle with many foreign airlines with decades of experience in the industry following its entrance on the Nigeria-London route.
Some of the industry’s experts say the airline required support from the government and a strategic approach to stay competitive.
Analysts have also stated that the strategic move has garnered high praise from stakeholders in the aviation sector, considering that Nigerians were paying exorbitant prices to travel from Nigeria to London, but that sustaining this momentum will require more than just offering low prices.
On March 31, 2024, the 11-year-old airline made a bold statement with its inaugural flight, using a Boeing 777 aircraft, offering a capacity of 274 seats and carrying 260 passengers from Lagos to London.
It sold its tickets for N1.2m, a price way lower than the rates offered by most foreign airline operators plying the same route.
Just two weeks after entering the market, Air Peace’s Chief Executive Officer, Allen Onyema, complained on Arise TV that foreign airlines were undercutting prices in an attempt to push Air Peace out of the market.
Onyema said, “We are aware that there are devilish conspiracies. All of a sudden, airlines are pricing below the cost. One airline is advertising $100  and the other $350. If you peel up your entire aircraft and carry people on the wings, it is not even enough to buy fuel.
“Why are they doing that? Their government is supporting them because Nigeria has been a cash cow for everybody. The idea is to take Air Peace out, and the moment they succeed in taking Air Peace out, Nigerians will pay 20 times over. It would happen, God forbid, if they were able to take Air Peace out”.
It was gathered that an economy ticket for a flight scheduled for April 29, 2024, from Lagos to London costs about N679,375 on Ethiopian Airlines, an operator with 75 years of experience.
Air Peace priced the same ticket at N1,090,750. The difference is that on Air Peace, it will be a 6-hour non-stop flight, while on Ethiopian Airlines, it will take 16 hours with one stopover.
Last Friday, Ethiopian Airlines reduced the price of its London ticket by 0.77 per cent to N1,628,660 from  N1,641,249 two weeks ago.
In the same period, Air France’s price dropped to N1,687,824, nearly halving from last month’s N2,482,138.
On March 4, 2024, Lufthansa offered the Lagos-London route for N1,966,165. Qatar Airways provided the same ticket for N2,016,824, and KLM priced it at N2,448,740.
This continuous decline in air ticket prices was also driven by the strengthening of the naira against the US dollar and the payments of airlines’ trapped funds by the Central Bank of Nigeria.
Minister of Aviation and Aerospace Development, Festus Keyamo, had confirmed that the Federal Government, through the CBN, had cleared all the trapped funds (foreign exchange backlogs) to the tune of about $160m.
Beyond the ongoing price war, the Air Peace Chairman had also lamented the challenges with ground handling and space allocation at the London Gatwick Airport, adding that no airline has faced such obstacles before.
He noted, “On the inaugural flight out of London, 24 hours before departure, the management of Gatwick Airport moved us to another checking area instead of the designated one.
“The area they provided had a malfunctioning carousel, forcing us to manually transport luggage 50 meters away, causing delays”.

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PH Airport Users Lament Down Turn In Flight Operations 

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Users and business operators at the Port Harcourt International Airport, Omagwa, have decried the downward trend in flight operations at the airport.
Some of the users and operators told The Tide that flight operations at the airport, rather than go upward, have steadily been irregular, and diminishing steadily.
A regular air passenger of the airport, Simeon Echeonwu, in a chat with The Tide, said many airlines, both domestic and international operators, that usually operate at the Port Harcourt airport, have stopped operations, whereas others that are still operating are no longer very stable as before.
Echeonwu noted that airlines such as Aero Contractors, United Nigeria, and Green Africa airlines, now operate about one flight, twice a week, unlike before that they flew every day on Lagos and Abuja to Port Harcourt.
Also speaking, former Chairman of the FAAN Accredited Car Hires Association, Clifford Wahunoro, lamented that the down turn in Operations has affected the business of car hires.
“If you have noticed, I have not been regular at the airport for some time now, because business is no longer flowing at the airport as before. I will not fold my hands and be sitting down doing nothing, so I have to look for other things, so I come when I think there will be something.
“You can see that between 12noon and 1pm, after that segment of flights, when you have few flights arrival, many people will close for the day, and when you wait till evening, flight like Dana may come very late at night, and sometimes, it will not arrive, and by that time, many people will not like to book for commercial vehicle”, he said.
Meanwhile, a travel agent, who wished to be anoyimous, decried the rate at which the airport is going down in terms of flights operations, noting that Port Harcourt airport ought to be competing with the other major airports like Lagos and Abuja.
He queried if such was a calculated attempt to bring the airport to its kneel in terms of flight operations, while other major airports have steady flow of flight operations both for domestic and international.
TheTide observed a continuous distortions in flight movement at the airport. Some of the airlines, like Max air, which many passengers patronize, have completely stopped operations, and no new airline has been added.
Apart from the Air Peace Airline that has maintained some level of stability in operations, other few operators have been involved in either steady rescheduling of flights, cancellation and regular delay, resulting in poor and unpredictable flight movement, which affects or determine other businesses in the airport.

By: Corlins Walter

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