Whoa: Nigerian Startup Orders 100 737 MAX Aircraft

I’m a huge fan of airline startups, as I find them fascinating to watch. Of course there are all kinds of airline startups. There are real airline startups, that are well funded and founded by experienced airline executives. And then there are… less real airline startups.

Green Africa Airways, a startup airline based in Lagos, Nigeria, has just placed an order for up to 100 Boeing 737 MAX 8 aircraft. This includes 50 firm aircraft orders, as well as 50 options.

The total deal carries a list price of $11.7 billion, which is the largest single aircraft order we’ve ever seen from Africa. That’s pretty remarkable, when you consider that this isn’t even an airline that’s flying yet.

Here’s what the founder & CEO of Green Africa Airways had to say:

“Today is a historic day for the Nigerian and African aviation industry. This landmark deal takes us much closer to our long-held dream of building a world-class airline that will unlock a new realm of positive possibilities for millions of customers. Broadly speaking, this deal is a bold symbol of the dynamism, resilience and soaring entrepreneurial drive of the next generation of Nigerians and Africans.”

The goal is for Green Africa Airways to be a “value airline” based in Lagos. The airline has already received its air transport license from the Nigerian government, and is in the process of getting their air operator’s certificate.

Now here’s the thing. When I hear of African startup airlines, I’m generally quite skeptical. Not just due to the number of “scam” startup airlines we hear of, but rather mainly because even if an airline has good intentions, there are so many barriers businesses face in Africa.

But what’s interesting is who is behind this airline. Some former American Airlines executives are involved in starting up this airline, including Tom Horton, former CEO of American Airlines, as well as Virasb Vahidi, former CCO of American Airlines. As Vahidi explains:

“Nigeria is uniquely positioned to be the home of the next major value airline. The strategic partnership with Boeing positions Green Africa Airways to expand and improve air travel for customers in Nigeria, and further strengthens the relationship between the United States, Nigeria and Africa.”

The plan is for the airline to first develop the Nigerian market, and then build a strong pan-African network.

Bottom line

Green Africa Airways sounds to me like Africa’s most ambitious airline startup ever. Ordering a minimum of 50 firm Boeing 737 MAX aircraft before even launching operations sure is a big commitment.

It sounds to me like this airline is fairly legitimate based on who is behind it. However, there are so many roadblocks and challenges to starting an airline, and I imagine that’s only amplified further when you’re dealing with the African aviation market.

What do you make of Green Africa Airways?

Comments

  1. If this startup airline goes through, maybe they’ll even partner with Delta, to feed their Lagos to Atlanta and New York-JFK flights… This is a long stretch, but it could happen

  2. Interestingly, I just received some email from the CEO of this airline – apparently he is a distant relative of mine – informing me of the good news that I have been appointed to the airline’s Board of Directors, which entitles me to not only a large one-time payment of 3.45 million US dollars, as well as unlimited free travel in Emerald First Class on the airline once they begin flying….but best of all, as a member of the Board of Directors, I get free use of one of their 737s as my personal aircraft for a week, one week every year! All I need to do is provide some basic documentation to verify my identity (copy of my passport, driver’s license, SSN, bank account numbers, and my home phone number), and wire them a small deposit to confirm my position and reserve my week on the aircraft. Such good fortune! I can not wait!

    Lucky, it sounds like you received the same email? What a coincidence! Congratulations on your well-deserved good fortune!

  3. This is just too funny. I mean….other than Ethiopian Airlines, is there any other airline in Africa making money these days? And this guys want to start one from scratch by ordering a minimum of 50 planes? Yeah right.

  4. Mango and Comair (Kulula & British Airways in Southern Africa) are profitable I think, not sure about FlySafair, but basically the LCC (or “value”) model can work in Africa, and I can see a well-run and funded airline making in-roads in West Africa which is growing quickly, I’d imagine the market isn’t too different from India economically

  5. Lucky, you may want to consider whether you have an unconscious bias towards (black) Africans and it’s whats maybe got you doubting this airline from the get go, even though ultimately you may be right. And before the long knives come out from the offended, here is why I think you have a clear tension in what to make of this as observed in your writing:

    1. Prior to questioning the merits of the deal you highlight that it is the largest deal for airlines in Africa, but don’t discuss some of the points normally raised about aircraft orders, e.g. nobody pays list price, even for “committed” orders there is a lot of flex in that commitment, at times there are lessors behind a purchase that are in position to deliver elsewhere or are double counting a single order to talk up their book. There was an opportunity for context, that chipped away at the potential credibility of the venture.
    2. While South Africa is one of the richest nations in Africa per capita and its 2nd/3rd largest economy, Nigeria is the largest economy and an OPEC member at 6 or 7 in revenue, with oil only accounting for less than 15% of GDP. $11bn is a lot of money, but this is no small fry country/economy.
    3. Having not considered a broader context, you hang your assessment of potential success on the presence of two airline veterans who happen to not be African. It is western saviour confirmation (yes I know Mr Vahidi is Persian, its a rhetorical tool) wrapped coat of airline experience. These same people and their presence is not going to address lack of a liberalized aviation market.
    4. Again a little more context may have helped in your assessment, Nigeria despite the oil and forex driven slump of the last 2 years, is an aviation market with good demand for international traffic and sorely lacking on the internal and regional flights.

    The crux of your story is well supported in history, but I think it’s worthwhile to consider if you have that bias and to keep it in mind, because it jumped out to me alongside the move to start.

  6. @Michael

    Yes…but Mango is the child of SAA…and even if SAA is in deep trouble, it means that Mango didn’t come out of nowhere like this new airline.

    And the Indian market is a mess as well. Both Air India em Jet Airways are loosing tons of money and the smaller airlines aren’t doing much better. Maybe we can exclude IndiGo.

  7. Clearly people who do not know what they are doing.

    In a market where the average passenger per departure is less than 100 and the average stage length is 250nm or about 50 minutes, what are they doing with Boeing Max Aircraft?

    Nigeria currently has about 11 Million domestic passengers per annum and about 6 scheduled domestic Airlines. What do they need 50 Aircraft for??

  8. Well I’m sure that Boeing have done their due diligence and have seen the funding plan and some proper hard cash otherwise this won’t end well!

  9. Why is it that every time Lucky mentions that fraud is rife in West Africa, someone comes out of the woodwork and calls him a racist? Nigeria is shady. Their #1 industry is corruption. Their #2 industry is oil. Their #3 industry is fraud, known locally as “419.”

    I mean, scamming people is so popular there that it was the subject of a nationwide hit song: https://www.youtube.com/watch?v=D_YjvC4ndzM

    I’m pretty confident that if, say, Canada had the same poor reputation for dodgy business, Lucky would take a similarly skeptical view toward Canadian airlines. This has nothing at all to do with race.

  10. “bold symbol of the dynamism, resilience and soaring entrepreneurial drive of the next generation of Nigerians and Africans.”

    Very bold. As long as they’ve done their research. We’ll see what happens.

  11. I’m a bit surprised at the comments here.

    Indeed the history of aviation in Nigeria is littered with failures and this is not surprising given the harsh local business environment and the fact that most previous experiences were run by neophytes in the business and/or for other purposes that providing air service.

    However the fact remains that Nigeria (and in fact most countries in Africa) desperately needs a decently-run carrier!

    There is space and huge latent demand for a well-run, reliable, low-frills airline in Nigeria. The domestic market alone could use those 50 aircraft.

    This venture seems well capitalized and well connected. I wish them the best of luck!

  12. I am very optimistic this would work, I don’t care about all the hate speech I believe lots of research work had been put in place even before now, such an amount if max aircraft wouldn’t have been ordered for even those in charge have not done their home work well. There are good business profitable business and good people all over Nigeria. Nigeria is just been made a scapegoat that is been tagged for 419 , corruption. But I can confidently say there are so many countries in the world that are worse than Nigeria like they say it is only who is caught stealing that is the thief everyone sees but time will tell. I believe and believe that Green Africa Airways will Work in Nigeria. Kudos to the stakeholders and everyone involved. Success all the way Success

  13. @”Sir Allister Madison-Cooke III”

    Sir, you are clearly an impostor – probably living in, if not a citizen of, the renegade American colonies.

  14. I just spent some time living in Nigeria and traveling within the country, the problem is a lack of reliability and trust within the local carriers. When traveling from one city to another, you never knew if the flight was going to take off at all or not and if it did how delayed was it going to be (because it was always delayed). Given this was the situation domestically, it was hard to trust the local carriers in traveling internationally so we choose another carrier because at least that carrier would take off and eventually get you there.

    I applaud the initiative of the industry and the businessmen of starting the venture, but initiative is not what is lacking in the Nigerian Aviation Industry. Infrastructure development, on time reliability, consistency and dependency are what are lacking.

    You can read reviews of my domestic flights on two Nigerian airlines – Arik Air and AirPeace – on my blog.

  15. Nigeria is a corrupt cesspit filled with fraudsters. It’s close to being a failed state, with an inept government and even more inept military incapable of providing good governance and security.

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