Arik, Aero fate hangs in the balance

Will the Assets Management Corporation of Nigeria (AMCON) sell off Arik Air and Aero Contractors, two major airlines taken over from their original owners?

This is the poser causing unease in the aviation sector following the statement attributed to the AMCON Managing Director, Ahmed Kuru, that both carriers would have been sold before 2023.

Kuru was quoted as saying, “We will deal with some of those key assets very soon - like the Peugeot Nigeria Limited in Kaduna, CDL, Aero Contractors, Arik Air and a host of others. But I must tell you, as we close in on these individuals and entities that owe us, I want you to know that they will call us names, they will blackmail us, they will threaten us, malign and harass us.”

Prior to Kuru’s statement, Senior Vice-President, AMCON and Head Receivership Support, Arik Air, Mr. Omokide Kamilu, had given similar indication when he told some aviation correspondents that AMCON was not going into aviation business.

He said, “The initial recovery level was pursuing, building capacity level and let them repay. Where we are now is not build capacity and let them repay, it is build capacity and exit now. How you exit can take different forms. And we have people in AMCON working on that beat.

“So we are not going into aviation business. Our job in Arik is to first stabilize it so that we can put the company in a position to repay its loans. We are very clear, we are not getting into aviation business”.

Aero Contractors, the oldest airline in Nigeria founded by the late business man, Alex Ibru, was first taken over by AMCON in 2016 with receiver-manager appointed to manage it. The AMCON intervention came at a time the airline was on the verge of going under, carrying out epileptic operations and burdened by huge debt. But presently under a new management appointed by AMCON, Aero Contractors bounced back a bit especially with its venture into Maintenance, Repair and Overhaul (MRO).

Arik on its part, owned by Sir Johnson Arumemi-Ikhide, suffered the fate of Aero in February 2017 as AMCON, acting on a court order, took over the management of airline which prided itself as the largest airline in West and Central Africa.

It was no doubt the largest carrier in the country, flying to three international destinations - London, New York and South Africa - apart from having massive presence in the West Coast and operating with over 20 aircraft.

But the fortunes of the airline dipped badly with less than five aircraft in the fleet at the time of AMCON’s intervention. The carrier was said to be hugely indebted to local and foreign creditors with AMCON putting the indebtedness at N387 billion.

The takeover of Arik was greeted with legal tussle as the original shareholders of the airline challenged the action of AMCON in intervening in the carrier.

One year after the takeover of Arik for instance, the operation of the carrier has stabilized to some extent with the fleet grown to more than 10 aircraft and many routes reopened.

With the case still in court, analysts say it would be unthinkable to go ahead and sell off the carrier.

It was however learnt that the original shareholders are strongly committed and determined to take back their company. But this can only happen when they are able to repay the debt owed local and foreign creditors which would provide the basis for the exit of AMCON.

Stakeholders therefore expect the Arik shareholders to carry out due diligence of offsetting the debt portfolio amidst claim that the assets of the airline far outweigh the acclaimed liabilities.

“I can tell you nobody is bidding for Arik. We are getting back our airline and that will be very soon,” said a source who spoke under condition of anonymity.

But aviation analyst, retired Group Capt. John Ojikutu believes that Arik would never be able to repay the loans even as he suggested that the carrier, alongside Aero Contractors, should be converted to national carrier.

“Arik in the next 10, 20 years cannot pay back its indebtedness of over N300 billion with its present fleet and the level of operations. In my own opinion, these aircraft might end up as government and Nigerians’ equities in the national carrier,” he said.

Aviation veteran, Capt. Dele Ore who is also a lawyer, said AMCON has managed the intervention in Arik in line with the laws establishing it.