AMCON Considers Merging Arik and Aero Contractors to Create National Carrier Amid Debt Crisis....KINDLY READ THE FULL STORY HERE▶

The Asset Management Corporation of Nigeria (AMCON) is contemplating a merger between Arik Air and Aero Contractors as a solution to their mounting debts, with the possibility of converting the merged entity into a national carrier. This announcement was made by AMCON’s Managing Director and Chief Executive Officer, Gbenga Alade, during an interactive session with media executives in Lagos.

Alade revealed that both Arik and Aero Contractors are burdened with substantial debts, which they are struggling to repay. The idea of merging the two airlines and converting them into a national carrier was previously proposed to the former Minister of Aviation but was rejected. However, Alade stated that AMCON plans to reintroduce the proposal, believing it to be the best course of action.

“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,” Alade said. Despite the previous rejection, AMCON remains optimistic, even though the special purpose vehicle (SPV) initially created for this conversion has been sold. Alade mentioned that a new SPV could be established to facilitate the merger.

This development comes after the controversial launch of Nigeria Air by former Aviation Minister Hadi Sirika, just days before the end of President Muhammadu Buhari’s administration. The launch, which granted Ethiopian Airlines a 49% equity stake in the company, sparked concerns among stakeholders about the ownership structure. Following this, the House of Representatives in June 2023 called for the suspension of Nigeria Air, labeling it a fraud.

The new Minister of Aviation, Festus Keyamo, later announced the suspension of the Nigeria Air project, clarifying that it was never truly a Nigerian airline but rather a venture by Ethiopian Airlines using the Nigerian flag. Keyamo emphasized the importance of having a national carrier that is wholly Nigerian, serving the full benefits of the nation.

In a recent legal twist, a Federal High Court in Lagos nullified the sale of shares of Nigeria Air to Ethiopian Airlines, halting the Federal Government’s plans to establish the national carrier. The court’s decision was in favor of the Registered Trustees of the Airline Operators of Nigeria and other aviation stakeholders who opposed the sale.

The financial struggles of Arik Air and Aero Contractors have become a significant concern for AMCON. Alade admitted that the current status of these airlines has been a source of stress, particularly due to the large debts they owe. Arik, for example, owes about $52 million to Afreximbank, one of its major international creditors. After negotiations, the airline offered to settle for $8.5 million, but the source of this payment remains uncertain.

To prevent Arik from losing vital assets, such as aircraft engines, which are critical for its operations, AMCON is exploring alternatives. Alade mentioned that the corporation is working on ensuring that more of Arik’s planes are operational, aiming to have seven planes flying by February next year.

The financial troubles of Arik Air are further complicated by a recent court order that led to the grounding of its aircraft by the Nigerian Airspace Management Agency (NAMA). This enforcement action was initiated by billionaire businessman Arthur Eze, who is owed $2.5 million by Arik’s founder, Johnson Arumemi-Ikhide.

AMCON’s involvement in the management of Arik and Aero Contractors dates back to 2016 and 2017, respectively, when the corporation took over the airlines due to their inability to meet debt obligations. Despite efforts to recover the companies, the financial situation remains dire.

As part of its broader asset recovery strategy, AMCON is taking steps to recover nearly N5 trillion in outstanding debts. This includes engaging international asset tracers to locate and recover assets hidden by debtors abroad. Alade highlighted that the new management has already recovered approximately N100 billion from high-profile debtors in just five months, with strong support from the Federal Government and other key stakeholders.

AMCON is also focusing on resolving issues in the oil and gas sector, which could significantly boost production, generate foreign exchange, and create employment opportunities. Additionally, the corporation is addressing challenges in the power and telecommunications sectors, aiming to revive dormant assets and improve the overall business environment in Nigeria.