Nigeria's central bank said on Sunday it was extending a NGN500 billion naira (USD$3.3 billion) fund intended to stimulate credit to the power and manufacturing sectors to the country's troubled airline industry.
Domestic airlines in sub-Saharan Africa's second biggest economy have gone through rapid expansion in recent years and are heavily indebted to the country's banks, themselves just recovering from the impact of a $USD4 billion bailout last year. Higher prices for jet fuel have already forced some smaller airlines to ground some flights, Nigerian media have reported.
"These airlines can now partake from the fund and those that are indebted to banks can refinance their loans and amortise them over a period of 10-15 years," central bank spokesman Mohammed Abdullahi said.
"This we believe will help put off a feared financial crisis in the aviation industry," he said.
Nigeria's airline industry has become highly competitive in recent years, particularly on domestic routes, with new carriers such as Arik Air and Dana Air springing up to compete with older firms such as Aero Contractors and IRS Airlines.
British billionaire Richard Branson's Virgin Group has said it is looking to sell its 49 percent stake in Virgin Nigeria, which recently changed its name to Nigerian Eagle Airlines and said last year it needed fresh capital.
The airline last year suspended its loss-making long haul flights to Britain and South Africa to focus on domestic and regional operations, under pressure from one of its main financial backers, Nigeria's United Bank for Africa.
Analysts have warned some Nigerian airlines are in such financial dire straits that they could end up being forced to merge or face collapse.
*Reuters