Arik May Lay off Workers over Low Revenue

Chinedu Eze

With a projected monthly revenue of about N1.5 billion, Nigeria’s beleaguered airline, Arik Air, may sack more than half of its workforce as it cannot generate enough revenue to pay about 2000 of its Nigeria staff, THISDAY has learnt.

Before the airline was taken over by the Asset Management Corporation of Nigerian (AMCON) on February 8, 2017 and before the downturn of the nation’s economy, the airline was generating about N7 billion monthly and was able to pay the wage bill of about N1 billion, service its 28 airplanes and fund its operations.

From 120 flights a day, Arik currently operates 16-20 flights daily with very low load factor.

Now with projected revenue of N1.5 billion, the airline would either owe its workforce or lay off many of them.

But the media consultant to Arik Air, Simon Tumba, denied that the airline has any plans to sack the workers.

He said instead of sacking workers, the new management appointed by AMCON was planning to service five more aircraft and put them back in the air.

According to a source from the airline, the challenge the airline is having is lack of funds because it cannot on its own generate enough revenue to service the aircraft already on AOG (aircraft on ground).

THISDAY learnt that to service the five airplanes mentioned by Tumba, the airline would need about $1.5 million, which it may likely source from the black market.

It was earlier reported that AMCON may inject about N15 billion into the airline as start up fund after the initial funding of about N4 billion, but the hope of getting more fund from the government agency continues to recede as the leadership of the airline, led by Captain Roy Ilegbodu, grapples with the airline’s management.

On the alleged debt owed the International Air Transport Association (IATA), former management of Arik Air explained that it did not owe the international agency, but IATA has the mandate to collect the revenues of the Federal Airports Authority of Nigeria (FAAN), the Nigerian Civil Aviation Authority (NCAA) and the Nigerian Airspace Management Agency (NAMA), so as Arik paid its charges to these agencies, the invoices were duplicated in IATA, saying that the alleged $78 million debt was a misunderstanding.

“We have our receipts and banking tellers to back these payments, which we made directly to these agencies instead of through IATA. The agencies should have notified IATA to clarify that these debts represented by those invoices had been paid by the airline. Meanwhile, our court case with FAAN still subsists,” said a source from the former management of the airline.”

The planned sack was confirmed by inside sources, which disclosed that the airlines would have to sack some of the expatriate pilots and some Nigerians because it cannot keep the workforce when it could not generate enough revenue to pay the bills “because even now we are already incurring heavy losses.

“To fix the airplanes we need money. We may have made a mistake by stopping the Lagos-London flights because it is now difficult to get spares from the manufacturers, which we used to fly in from London and we need the spares on regular basis,” a management official said, adding that the new management had to cut off regional and international flights because it is difficult to source forex to services those routes, noting that the downturn of the economy is what is threatening the existence of Nigerian airlines.

It was also gathered that Captain Ilegbodu said he cannot compromise the safety standard of the airline; that he must get spares directly from the manufacturers; that instead of getting spares from secondary sources, he would rather rest the airplanes.

According to informed source, Ilegbodu said he would not want to record any major incident or accident while the airline is under his management.

An official of the airline said one of the major challenges Arik Air is facing is the reduction of its frequencies and destinations, coupled with the fact that passengers have shunned the airline because of the growing uncertainty surrounding Nigeria’s biggest carrier.