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Confusion over status of Cross River State Cally Air

The Cross River State owned airline, Cally Air may have run into crisis over assets concession problems.

The airline which came into existence about two years ago and being managed by Aero Contractors, seems to have been caught in the midst of a disagreement between the outgoing government and the incoming government on one hand, and Aero Contractors on the other.

Information gathered alleged that while the outgoing governor wanted the aircraft, a Boeing 737-300 with the registration number: 5N-BYQ brought to Calabar for commissioning and eventual “concessioning” exercise, the incoming governor is said to have suspected a foul play in the entire arrangement.

Besides, the outgoing governor had earlier in the year listed some of the state’s assets to be concessioned to private firms to include Cally Air.

The plan to concession the state’s assets did not however, go down well with some indigenes of the state as one of them immediately sued the State Government in court to stop it from going ahead with its plan.

A source close to the State Government had alleged that the Cross River State Government planned to “concession” the airline to its consultant and asset manager, IRS Airlines Limited.

Aero Contractors, which has been operating and managing the airline since it signed a Memorandum of Understanding (MoU) with the State Government on April 30, 2021 for operations for maintenance of the airline until recently, is however said to be reluctant to release the aircraft to the State Government over an alleged breach of agreement by the government.

The state government is said to be indebted to Aero Contractors to the tune of N900 million for services rendered to it on the operations and maintenance of Cally Air for over 24 months.

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.

According to the MoU, the Cross River State Government, acquired two airplanes; 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 passenger transport aircraft.

The B737-300 with the registration number: 5N-BYQ is still parked at the Aero Contractors hangar, while the other B737-300 with the registration number: 5N-GRS is at the graveyard of the Murtala Muhammed Airport (MMA), Lagos due to its non-airworthiness.

Two weeks 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, respectively, held a meeting with the management of Aero Contractors management on the possibility of returning the aircraft for concessioning.

Whike the Aero Contractors management agreed to the deal, it however raised concerns over the N900 million debts owed by the government.

A source close to Aero Contractors confirmed the development but declined to give more details.

It was also gathered that due to some disagreement with the State Government, Aero Contractors had suspended the use of the aircraft, which is presenrly being parked at its hangar.

The Cross River State Government failed to pay the airline for maintenance of the aircraft while the sharing formula agreed by the duo was not equally honoured.

The agreement emphasized 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; it is expected to get 5 per cent, while Cross River State Government would earn 85 per cent on the same conditions attached to Aero Contractors.

According to the source: “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 Cross River State Government acquired the aircraft from AirBatic on April 21, 2021.

The aircraft has 144 seat capacity in two classes configuration of business and economy seats.

The Cross River State Government had launched its airline, Cally Air, as part of efforts to boost economic activities in the state and across the country.

The maiden flight of the airline was operated to Margaret Ekpo International Airport in Calabar, the state capital in June 2021.

Ayade had said that it was a dream the government had in 2017, occasioned by the high influx of traffic into Calabar and the monopoly of some airlines dominating the Calabar route.

His words: “Cally Air belongs to Cross River State. No loan, no facilities were obtained and it is one hundred percent a property of the citizens of Cross River State.

“I don’t own it, Aero Contractors do not own it. No one has a percentage share. The recruitment was done by Aero Contractors, but we have a responsibility to ensure that the sensitivity and ethnic differences in Cross River are reflected,” he had said.

Aero Contractor, the operator of the airline, had suspended operations in July 2022 over paucity of funds and foreign exchange challenge.

The airline had earlier in April 2022, halted flights into the Cross River State capital.

The flight to Calabar from Lagos was operated with one of the two B 737-300 aircraft.

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