Arik and Aero Contractors airlines are set to combine and become a national carrier, according to the Asset Management and Corporation of Nigeria.
This was said on Monday during an interactive meeting with media executives in Lagos, led by Gbenga Alade, the Managing Director and Chief Executive Officer of AMCON.
Alade claims that because Arik and Aero Contractor owe so much money, they might not be able to make the payments.
According to him, the corporation proposed to the former aviation minister converting Arik and Aero Contractor, but the suggestion was turned down.
“The former administration of AMCON proposed transforming Arik and Aero into a national carrier. However, the former aviation minister rejected the notion.
“ We’ll present it again because it’s the greatest choice.
“Unfortunately, the special purpose vehicle created by AMCON’s prior management to convert Arik and Aero into a national carrier has been sold.
“But we can create another SPV for this,” he explained. Recall that Hadi Sirika, the previous Minister of Aviation, established Nigeria Air three days before the conclusion of former President Muhammadu Buhari’s administration.
Stakeholders were alarmed by the development because of the ownership structure that provided Ethiopian Airlines a 49% equity holding in the business.
Three Nigerian investors together held 46% of the shares, with the Federal Government owning the remaining 5%.
In response to the agreement in June 2023, the House of Representatives called it a scam and requested that the Federal Government halt Nigeria Air’s operations.Festus Keyamo, the minister in charge at the time, declared in August 2023 that the national carrier project would be put on hold indefinitely.
Keyamo stated, “It remains halted. It was never called Air Nigeria. It wasn’t Air Nigeria. That is the truth. It was just painted Nigeria Air. It was Ethiopian Airlines that attempted to flag our flag.
“If that’s the case, why can’t our local plane fly our flag? So no one should argue that it was Nigeria Air.
“Air Nigeria must be indigenous, must be wholly Nigerian, and must be for the full benefits of Nigeria, not that 50 per cent of the profit is for another country.”
Recently, a Federal High Court in Lagos blocked Nigeria Air’s sale to Ethiopian Airlines. After addressing the grounds raised in the petition, the court declared the sale of Nigeria Air shares to Ethiopian Airlines null and void.
Justice Ambrose Lewis-Allagoa directed that the Federal Government’s intentions to establish a national carrier, Nigeria Air, be blocked.The decision favoured the Registered Trustees of the Airline Operators of Nigeria and five other aviation industry players.
At the Monday briefing, Alade stated that the current state of Arik and Aero Contractors had been causing him sleeplessness.
“Believe me, it is a difficult problem to tackle, and it is causing me sleepless nights, especially Arik.
“Arik is owing so much that they cannot pay,” he told me.
Alade added, “There is a way out. We have met with their key international creditors. Afreximbank is one of these.They (Arik) owe Afreximbank roughly $52 million.” Following negotiations, he stated that the airline was only willing to accept $8.5 million out of $52 million.
“However, where will the $8.5 million come from? Where? AMCON does not have his own money to invest there? And so they negotiated and said, yeah, ‘Let’s take some of those things’ engines away in complete and final settlement. And the truth is that if they remove those engines, Arik is done.
“But we said no, we cannot let you take it away. Let AMCON provide you with a bank guarantee. And we will stretch it so that three planes are flying today, and by the Lord’s grace, by February next year, we want to have seven planes flying for Arik,” he said.
According to reports, the Nigerian Airspace Management Agency grounded Arik planes following a court order issued by the airline’s creditor, millionaire businessman Arthur Eze.
Eze had sought the court to challenge his owed $2.5 million by Johnson Arumemi-Ikhide, the founder of Arik Air. NAMA’s spokesperson, Abdullahi Musa, stated that the development resulted from an enforcement action by the FCT High Court on July 19, 2024, which comprised attaching Arik’s planes to secure the debt.
AMCON took over management of Aero Contractors in 2016 when the board of directors was disbanded, appointing a manager to administer the company’s business in an interim capacity.
According to a statement issued by its media consultancy firm, AMCON’s decision to take over the company’s administration was made in furtherance of its mission to acquire qualified bank assets and put them to profitable use.
Similarly, Arik Air, founded by Mr Arumemi Johnson, was acquired by AMCON in 2017 after the carrier’s management failed to meet debt obligations of several billions of naira.
AMCON has taken up Arik’s debts owed to local banks. Last year, the corporation requested Arik’s owners to provide a realistic debt resolution plan to the bad debts management if they wanted to recover the company from the federal government. Amcon’s asset recovery efforts In an effort to recover approximately N5 trillion in outstanding debts, Alade revealed intentions to hire international asset tracers to find and reclaim assets concealed offshore by obstinate debtors, including those disguised as special purpose vehicles.
Alade added that since the new management took over roughly five months ago, they have effectively recovered approximately N100 billion from numerous high-profile creditors and altered the sale of some assets.
He emphasised that the organisation has received strong support 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 efforts to recover debts transferred by banks to AMCON during the various stages of eligible bank asset acquisition.
The CEO of AMCON reported that during a significant stakeholders’ conference scheduled for the end of the year, the head of the House Committee on Finance had promised to publicly identify and disgrace debtors who had not paid their bills.
He disclosed intentions to host a conference to address the issues raised by non-performing loans in Nigeria, with senior representatives from the Central Bank of Nigeria, relevant ministries, banks, and the courts attending. He conveyed optimism that settling disputes pertaining to oil and gas properties will increase output, provide more foreign exchange, and provide jobs for locals.
In less than five months, he said, the company has accomplished amazing outcomes in two of those assets. He revealed that AMCON has achieved major strides in the power sector in one of the largest distribution businesses and an abandoned Kaduna power project.
Alade underlined the potential impact of addressing power difficulties in Nigeria, adding that certain banks with about 400 branches across the country spend up to N500 billion per year on diesel for their generators. He believed that addressing the power sector would greatly improve the overall business environment.
Accordingto Alade, AMCON is also working on telecommunications assets, with the goal of reviving and resuming operations.
In Essence
Arik and Aero Contractors are both deeply in debt, making their current operations unsustainable without significant intervention. The proposal to merge them into a national carrier could be a way to consolidate resources and streamline operations, potentially making the combined entity more viable.
However, the financial hurdles are enormous. For instance, Arik owes substantial amounts to international creditors like Afreximbank, and finding the funds to satisfy these debts while maintaining operations is a critical challenge.
