The Asset Management Corporation of Nigeria (AMCON) has revealed plans to merge Arik and Aero Contractors airlines and transform the combined entity into a national carrier.
The AMCON Managing Director/Chief Executive Officer, Mr. Gbenga Alade, disclosed this on Monday at an interactive session with media executives in Lagos.
Alade said Arik and Aero Contractors have accumulated significant debts, raising concerns about their ability to meet their financial obligations.
He disclosed that the corporation had previously proposed converting the two airlines into a national carrier to the former aviation minister, but the idea was rejected.
He said: “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.
“Unfortunately, the special purpose vehicle that was created by the former management of AMCON for the conversion of Arik and Aero to a national carrier had been sold. But we can create another SPV.”
Persecondnews recalls that the former Minister of Aviation, Sen. Hadi Sirika, launched Nigeria Air three days before the end of former President Muhammadu Buhari’s administration.
The ownership structure of the new national carrier has raised concerns among stakeholders, particularly with Ethiopian Airlines holding a 49% equity stake.
The Federal Government has a 5% stake, while a consortium of three Nigerian investors holds the remaining 46%, sparking debate about the level of Nigerian control and ownership.
In June 2023, the House of Representatives called for the suspension of Nigeria Air’s operations, labelling the deal as fraudulent and prompting a government response.
Two months later, in August 2023, the current Minister of Aviation and Aerospace Development, Mr. Festus Keyamo (SAN), announced that the national carrier project would be put on hold until further notice, effectively suspending its implementation.
Keyamo said: “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.
“If it is so, why not allow our local plane to fly our flag? So nobody should dispute 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 percent of the profit is for another country.”
Recently, a Federal High Court in Lagos issued an injunction stopping the sale of Nigeria Air to Ethiopian Airlines, effectively halting the transaction.
The court ruling declared the sale of shares to Ethiopian Airlines null and void, resolving the legal challenges presented in the case.
Justice Ambrose Lewis-Allagoa ordered the suspension of the federal government’s plans to establish Nigeria Air as a national carrier.
The judgment was delivered in favour of the Registered Trustees of the Airline Operators of Nigeria and five other aviation industry stakeholders.
At the briefing on Monday, Alade stated that the current status of Arik and Aero Contractors had been giving him sleepless nights.
He said: “Believe me, it is a very difficult problem to resolve, and it is giving me sleepless nights, particularly Arik. Arik is owing so much that they cannot pay.”
Speaking further, Alade said: “There is a way out. We have met all their major international creditors. Afreximbank is one of them. They (Arik) are owing Afreximbank about $52 million.”
After negotiations, he stated that the airline was only willing to take $8.5 million out of $52 million.
He said: “However, where will that $8.5 million come from? Where? AMCON doesn’t have money of his own to put there? And then they negotiated and said, Okay, ‘let’s take some of the engines of those things away in full and final settlement’. And the truth is that, if they took those engines away, Arik is finished.
“But we said, ‘No, we cannot allow you to take it away. Let AMCON give you a kind of bank guarantee. And we will stretch it so that three planes are flying now, and by the Lord’s grace, by February next year, we want to make seven planes fly for Arik.”
Persecondnews also recalls that the Nigerian Airspace Management Agency (NAMA) recently grounded Arik Air’s fleet due to a court order obtained by billionaire businessman Mr. Arthur Eze, who is seeking to recover a $2.5 million debt owed to him by the airline’s founder, Mr. Johnson Arumemi-Ikhide.
Eze had approached the court in protest against his unpaid $2.5 million by the founder of Arik Air.
According to a statement released by NAMA’s spokesperson, Mr. Abdullahi Musa, the agency’s actions were prompted by an enforcement order issued by the FCT High Court on July 19, 2024, which authorized the attachment of Arik Air’s aircraft as a means of securing the outstanding debt.
In 2016, AMCON assumed control of Aero Contractors by dissolving its board and appointing an interim manager to oversee the company’s operations.
This move, according to AMCON’s statement, was part of its mandate to acquire and revitalize eligible bank assets, with the goal of generating profits and maximizing their economic value.
Similarly, AMCON took control of Mr. Arumemi Johnson’s Arik Air in 2017 after the carrier’s management failed to honor its debt obligation, which totaled several billions of naira.
AMCON had taken over Arik’s debts from local banks.
In an effort to recover Arik Air from the Federal Government, AMCON required the airline’s owners to submit a viable debt resolution plan to the bad debts manager last year.
Meanwhile, Alade has announced plans to hire international asset tracers to track down and recover nearly N5 trillion in outstanding debts, including those concealed offshore by debtors using special purpose vehicles.
Since taking over five months ago, the new management at AMCON has achieved significant success, recovering approximately N100 billion from prominent debtors and renegotiating the sale of various assets.
Alade acknowledged the crucial support AMCON has received from key stakeholders, including President Bola Tinubu, the Central Bank Governor, the Federal Ministry of Finance, the Attorney General, and the National Assembly, in their efforts to recover debts transferred from banks during various phases of eligible asset acquisition.
He announced that the Chairman of the House Committee on Finance has promised to publicly expose debtors who have failed to repay their debts at a forthcoming stakeholders’ conference scheduled for later this year.
Additionally, AMCON plans to host a conference that will bring together high-level representatives from the Central Bank of Nigeria, relevant ministries, banks, and the judiciary to address the challenges posed by non-performing loans in Nigeria.
The CEO expressed optimism that resolving issues related to oil and gas sector assets would have a positive impact, leading to increased production, enhanced foreign exchange earnings, and job creation for Nigerians.
He highlighted that AMCON had made significant progress in resolving issues with two of these assets in under five months, achieving notable success in a short timeframe.
In the power sector, he disclosed that AMCON had made significant progress in one of the biggest distribution companies and an abandoned power project in Kaduna.
Alade emphasised the potential impact of addressing power challenges in Nigeria, stating that some banks with approximately 400 branches across the country spend as much as N500bn annually on diesel for their generators.
He believed that tackling the power sector would significantly improve the overall business environment.
AMCON, according to Alade, is actively working to bring dormant telecommunications sector assets back to life in order to maximize their potential for growth and productivity.
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