The Asset Management Corporation of Nigeria has announced that Arik Air and Aero Contractors may be merged and transformed into a national carrier.
According to The PUNCH, this possibility was revealed by AMCON’s Managing Director/Chief Executive Officer, Gbenga Alade, during a media interaction on Monday in Lagos.
Alade disclosed that both airlines have accumulated substantial debts that they may never be able to repay.
He mentioned that AMCON had previously proposed the idea of converting Arik and Aero Contractors into a national carrier to the former Minister of Aviation, but the proposal was not accepted.
“The former management of AMCON presented the idea of converting Arik and Aero to a national carrier. But the former aviation minister did not buy the idea. We will present it again because that is the best option,” Alade said.
He also noted that although the special purpose vehicle initially set up for this purpose was sold by the previous management, a new SPV could be established.
It’s worth noting that the former Minister of Aviation, Hadi Sirika, launched Nigeria Air just three days before former President Muhammadu Buhari’s administration ended.
This development raised concerns among stakeholders about the ownership structure, particularly the 49 percent equity stake held by Ethiopian Airlines.
The Federal Government held 5 percent, while a consortium of three Nigerian investors held the remaining 46 percent.
In response to the Nigeria Air deal, the House of Representatives called for the suspension of its operations in June 2023, labeling it a fraud.
Subsequently, in August 2023, the current Minister of Aviation, Festus Keyamo, announced the suspension of the national carrier project.
Keyamo clarified, “It remains suspended. It was never Air Nigeria. It was not Air Nigeria. That’s the truth. It was only painted Nigeria Air. It was Ethiopian Airlines trying to flag our flag.” He emphasized the need for a national carrier that is wholly Nigerian and for the full benefit of Nigeria.
Recently, the Federal High Court in Lagos declared the sale of Nigeria Air’s shares to Ethiopian Airlines null and void.
The court ruled in favour of the Registered Trustees of the Airline Operators of Nigeria and other stakeholders, ordering the Federal Government to halt its plans to establish Nigeria Air.
Alade expressed his deep concern about the current financial state of Arik and Aero Contractors, admitting that the situation is causing him sleepless nights.
“Believe me, it is a very difficult problem to resolve, and it is giving me sleepless nights, particularly Arik,” he said, pointing out that Arik’s debt is so substantial that repayment seems impossible.
He mentioned that AMCON has been in negotiations with Arik’s major international creditors, including Afreximbank, to find a solution.
Arik owes Afreximbank about $52 million, but the airline has only offered to pay $8.5 million. “However, where will that $8.5m come from? Where? AMCON doesn’t have money of his own to put there?” Alade questioned.
One of the negotiated solutions involved allowing creditors to take some of Arik’s engines as full and final settlement of the debt.
Alade warned, “If they took those engines away, Arik is finished.”
Instead, AMCON proposed providing a bank guarantee to prevent the removal of the engines, with plans to increase Arik’s operational fleet from three to seven planes by February next year.
The financial woes of Arik Air were further compounded when the Nigerian Airspace Management Agency grounded its aircraft due to a court order obtained by billionaire businessman Arthur Eze.
Eze had taken legal action against Arik’s founder, Johnson Arumemi-Ikhide, over an unpaid debt of $2.5 million.
AMCON took over the management of Aero Contractors in 2016 and Arik Air in 2017 after both airlines failed to meet their debt obligations.
AMCON had taken on the airlines’ debts from local banks, with Arik’s debt running into billions of naira.
In its broader asset recovery efforts, AMCON is working to recover nearly N5 trillion in outstanding debts. Alade revealed that AMCON plans to engage international asset tracers to locate and recover assets hidden by recalcitrant debtors offshore.
Since the new management took over about five months ago, AMCON has recovered approximately N100 billion from several high-profile debtors.
Alade highlighted the strong support AMCON has received from President Bola Tinubu, the Central Bank Governor, the Federal Ministry of Finance, the Attorney General of the Federation, and the National Assembly in its debt recovery efforts.
The chairman of the House Committee on Finance has pledged to publicly identify and shame debtors who have not repaid their debts at an upcoming stakeholders’ conference.
AMCON also has its sights set on resolving issues in the oil and gas sector, which Alade believes will boost production, generate more foreign exchange, and create jobs.
He noted that AMCON has achieved significant results in two key assets in this sector within the past five months.
In the power sector, AMCON has made progress with one of the country’s largest distribution companies and an abandoned power project in Kaduna.
Alade stressed the importance of addressing Nigeria’s power challenges, noting that some banks spend as much as N500 billion annually on diesel for generators to keep their branches operational.
AMCON is also focusing on reviving dormant assets in the telecommunications sector, aiming to bring them back into operation.
