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Finally, AMCON Takes Over Distressed Arik Air, Appoints New Management—Arik Owes N135B

February 9, 2017

In a statement made available to aviation reporters today, AMCON confirmed its seizure of the debt-ridden airline.

After months of speculations, with denials by the management of Arik Air, Asset Management Company of Nigeria (AMCON) has finally taken over the troubled Nigerian carrier.

In a statement made available to aviation reporters today, AMCON confirmed its seizure of the debt-ridden airline. 

Our aviation correspondent found that, prior to today’s takeover of the airline, Arik Air owed AMCON more than N135 billion in debt. The airline also owed N10 billion to other service providers. 

In its statement, AMCON appointed Captain Roy Ukpebo Ilegbodu, a veteran aviation expert, to run Arik under the receivership of Mr. Oluseye Opasanya, a Nigerian lawyer. AMCON explained that it took over the airline due to the carrier’s heavy financial debt that is threatening to permanently ground Arik.

Arik Air is responsible for the airlift of at least 55 per cent of freight in Nigeria’s aviation sector, but the carrier has been racked by financial and operational difficulties attributed to its bad corporate governance and weak operational practices. The airline has maintained an unreliable schedule, consistently failed to bring in passengers’ luggage, and has been unable to pay staff salaries. 

AMCON said Nigerian authorities called upon the corporation to intervene before Arik Air went under like many other carriers before it.

AMCON’s statement suggested that its takeover of the beleaguered airline underscored the Federal Government’s policy to instill order in Nigeria’s aviation sector. It remarked that the takeover was to prevent a major catastrophe and to protect as well as preserve Arik Air as a business. 

“This development will also afford Arik Air to go back to regular and undisrupted operations, avoid job losses, protect investors and stakeholder funds as well as ensure safety and stability in the already challenged aviation sector,” AMCON stated.

The statement quoted the Minister of State for Aviation, Hadi Siriki, as saying that the intervention would save the country’s aviation industry. It added, “We believe that this appointment is timely and will stabilize the operations of the airline.

“This will enhance the long term economic value of Arik Air and revitalize the airline’s ailing operations as well as sustain safety standards, in view of Arik Air’s pivotal role in the Nigerian aviation sector.”

Mr. Siriki also promised that the Federal Ministry of Aviation would support the new management of the strategic carrier, adding that steps had been taken to ensure that there would be no undue disruption in Arik’s regular business operations or activities as a result of the recent changes in the leadership and management of the airline.

Captain Ilegbodu, who will run the airline under the receivership of Mr. Opasanya, also assured staff of the troubled airline and other stakeholders that his appointment at Arik would enhance the carrier’s value, improve customer experience, and sustain the safety, reliability and secure operations of the airline.

“As a matter of fact, Arik Air has been in a precarious situation largely attributable to its heavy financial debt burden, bad corporate governance, erratic operational challenges and other issues, that required immediate intervention in order to guarantee the continued survival of the Airline,” AMCON disclosed in its statement.

It added, “Yesterday (Wednesday), Arik temporarily suspended its flight operations to the John F. Kennedy International Airport, New York, United States, claiming that the two Airbus A330-200 aircraft dedicated to the route have been taken to France for C check at the same time. Equally more than eight aircraft are currently grounded at the tarmac making it difficult to meet their routine commercial flights.”

Some of the myriad issues confronting Arik Air include confiscation of aircraft due to non-payment of leases, frequent flight delays, and constant fights between Arik Staff and irate passengers at both local and international airports etc.

“During the last yuletide season, passengers were stranded in airports all over the country due to Arik’s incessant flight delays and cancellations, which negatively affected the preference they enjoy from passengers. You are all living examples of this.”

AMCON assured all stakeholders that the intervention was in the best interest of the general public, workers, creditors and other aviation interest groups. Its statement declared that Arik Air was so overwhelmed that the worker’s wages were not paid for several months, leading to occasional confrontation between the management of the airline and different aviation unions in the country.

AMCON remarked that Arik’s inability to pay its workers for seven months had compelled the United Labor Congress (ULC) and Engineers Union recently to shut the offices of the airline across the country. The shutdown caused untold hardship to thousands of travelers and an embarrassment to the aviation sector in the country.

AMCON stated, “Besides owing workers’ salaries, the airline has also not been remitting the taxes of workers to relevant bodies thus also defrauding the country.

“The airline is also in perpetual default in its lease payments and insurance premium, leading to regular and embarrassing repossession of its aircrafts by lessors.”

AMCON assured all stakeholders that its intervention was in the best interest of the general public, workers, creditors and other aviation interest groups. It added that it was not out to frustrate any company, but to revive dying airlines.

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