The Asset Management Corporation of Nigeria (AMCON) said it has discovered “deep-rooted rot” at Arik Air, which it took over last Thursday.
In order to fully address the “rot” in the airline, AMCON said it would require an additional N10 billion, which is apart from the N300 billion the airline already owes to its creditors in the country.
A statement by AMCON quoted the new Chief Executive Officer of Arik Air, Capt. Roy Ukpebo Ilegbodu, as saying that the troubled airline needed N10 billion in order to resume full and uninterrupted flight operations to its regular routes across the country and beyond.
To emphasize the poor state of Arik Air, Mr. Ilegbodu explained that only nine planes out of the thirty in the fleet are operational. The remaining twenty-one, he said, have either been grounded or are in Europe undergoing aircraft maintenance checks (“C Checks”).
“As if these problems are not enough, the airline does not have money to procure aviation fuel for the nine operational aircraft because no dealer wants to sell aviation fuel to Arik if it is not on a cash-and-carry basis,” Mr. Ilegbodu added. “This also calls for public understanding because flight schedules may be realigned based on the nine aircraft that are available, technically sound, and ready for flight operations."
He further stated that Arik Air is in debt to its technical partners and has defaulted on its lease payments and insurance premium, which in turn has led to “regular and embarrassing squabbles with different business partners.”
“All these problems - in addition to huge staff salaries, which have remained unpaid for 11 months and vendors that supply different items to Arik Airlines that are also owed - mean that Nigerians may have to tarry-a-while to allow the new management to clean up the huge mess at the airline before Arik can finally resume uninterrupted flights,” Mr. Ilegbodu said.
He, however, assured Nigerians that these issues, though daunting, would be gradually resolved to enable Arik Air, which carries about 55 percent of air travelers in the country, to recover the 21 aircraft.
According to him, once all the aircraft are back to the fleet, Arik will within the shortest possible time regain its pride of place as a leader among the comity of airlines in Nigeria.
He reiterated the fact that the intervention at Arik clearly underscored the government’s decision to instill sanity in the nation’s aviation sector, adding that the move also prevented a major disaster that would have befallen the airline.
Mr. Ilegbodu hinted that AMCON had settled the insurance cover for the aircraft, which would have expired today, February 12.
It would be recalled that the Federal Government using AMCON, took over the management of Arik because the airline was seriously immersed in heavy financial debt burden that threatened to permanently ground it.
AMCON attributed the airline’s challenges to bad corporate governance, erratic operational challenges, inability to pay staff salaries and heavy debt burden among other issues.
He insisted that the recent intervention was in the best interest of all stakeholders, the general public, workers, creditors and other aviation interest groups in the country.