There are indications that all may not be well with Cally Air, owned by the Cross River State Government over “asset concession” and  managed by Aero Contractor

Trouble started brewing two after the airline commenced flight operations

It was gathered that Cally Air which is managed by Aero Contractor, the oldest airline in the country has caused dispute between the outgoing governor of Cross River State, Prof. Ben Ayade and the Governor -Elect, Price Bassey Ottu on one hand and Aero Contractors on the other.

AbelNews learnt that while the outgoing Governor is demanding for the embattled airline’s airplane, Boeing 737-300 with the registration number: 5N-BYQ to be brought to Calabar to be unveiled and later “concessioned”, the Governor –Elect on the other hand it was gathered is not comfortable with the arrangement and he is suspecting that there may be some hanky-panky in the whole deal.

AbelNews recalled that Ayade had earlier listed Cally Air and other assets as some of the state’s assets that were penciled down for concessioning .

A reliable source close to the Cross River State Government hinted that the idea to concession the state’s assets is causing ripples among the indigenes of the state.

In view of this, a Senior Advocate of Nigeria(SAN),Mr.  Mba Ukwenu instituted a case against the State Government in court to stop it from going ahead with its planned concession of the state assets.

The source added that the intention of the Cross River State Government is to concession the airline to its consultant and Asset Manager, IRS Airlines Limited.

The leaked plan to concession the airline to IRS Airlines Limited , it was gathered from the source had infuriated Aero Contractors, that has been operating and managing the airline since an Memorandum of Understanding (MoU)  was signed with the State Government on April 30, 2021 for operations and maintenance of the airline.

In view of this, the source added that Aero is reluctant to release the aircraft to the Cross River State Government alleging a breach of agreement.

Presently, the source disclosed that the state Government owes Aero Contractors over N900 million for services rendered to it on the operations and maintenance of Cally Air for over two years .

Recall that the MoU was signed among Cross River State Government, IRS Airlines Limited and Aero Contractors for the operation, commercial profit and maintenance of two Boeing 737 aircraft.

A copy of the MoU , which the online platform stumbled on showed that the Cross River State Government, acquired two aircraft; 5N-BYQ and 5N-GRS, and selected IRS Airlines Limited as its Consultant and Asset Manager, while Aero Contractors was designated as the operator and expected to provide licenses, permits and certificates necessary for the airline to operate a commercial passenger transport aircraft.

Checks revealed that presently the Boeing 737-300 with the registration number: 5N-BYQ is still parked at the Aero Contractors hangar, while the other aircraft Boeing 737-300 series with the registration number: 5N-GRS is no longer airworthy and has been parked at the graveyard at the Murtala Muhammed Airport (MMA), Lagos.

The online news platform learnt  that about fortnight ago, representatives of Cross River State Government, led by Jake Ottu Enyia and Mr. Udiba Effiong Udiba, Commissioners for Aviation and Asset Management and Recovery, had a meeting with the management of Aero Contractors management on the possibility of returning the aircraft for concessioning,

AbelNews gathered that Aero Contractors management cooperated with the representatives, but demanded for the payment of  over N900 million debts owed by the Cross River State Government .

Contacted, a source close to Aero Contractors confirmed the matter did not go further to explain what transpired.

The source added that as a result of the disagreements between it and the State Government, Aero Contractors had suspended the use of the aircraft, which is presently parked at its hangar.

“The Cross River Government failed to pay the airline for maintenance of the aircraft while the sharing formula agreed by the two parties in the MoU was not equally honoured,” the source said.

The online news medium gathered that the agreement indicated that as the operator, Aero Contractors would be entitled to 10 per cent of net sales after deductions of all taxes and charges and all operations expenses as well as any fixed amount due to Aero.

For IRS Airlines Limited; the agreement is that it will get 5 per cent, while Cross River State Government would earn 85 per cent on the same conditions as in Aero Contractors’.

“The agreement between Aero Contractors and Cross River State Government has broken down over non-adherence to the MoU. The State Government did not pay for the maintenance carried out on the aircraft in the fleet of the airline, which is over N900 million.

“Also, the State Government told the management to handover the aircraft to IRS Airlines Limited and prepare it for concessioning. But, the management insisted on the payment of debts owed before such a state could take place. As I am talking to you now, nothing concrete has been reached,” the source said.

Another source close to the airline  who also spoke on the condition of anonymity, said that though he was not there when the MoU was signed but lamented that apart from the fact the arrangement was not tidy, there were also many agents involved in the deal.

The source added that he would have asked for a full dry lease of the two aircraft, which will enable Aero  manage the aircraft 100 per cent and pay to the state government but that  the arrangement was extended to a third party, referred to as ‘Coordinator’

“I did not understand that. The arrangement is not favourable to Aero. I learnt it is also not favourable to the Cross River State Government. The arrangement is not transparent and sustainable and that’s why we may not operate the aircraft again; unless they are given to us on dry lease, an arrangement that is obtainable all over the world,” the source added.

As at the time of compiling this report, rhe Cross River State Government could not be reached for its own side of the story as efforts made to reach it officials proved abortive.