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Barely one year after the takeover of the management of Nigeria’s oldest aviation company, Aero Contractor Airlines, by the Assets Management Corporation of Nigeria (AMCON), the assets managers last week expanded its local airline confiscation move with the closure of two other airlines.
In what has been described as a threat to the local aviation industry AMCON recently announced the sack of the management of Arik Airlines and replaced it with a new one. The move did not only come with some form of apprehension in the industry, divergent views have been expressed over the action with some observers even claiming that the takeover was a ruse to set up a national carrier using the airline’s fleet.
To further complicate the situation of local airline operators, AMCON has secured a court order to take over the assets of another airline, Odengene Air-Shuttle Services, popularly known as OAS Helicopters in Lagos.
Integrity investigations revealed that AMCON recently sealed up the company at Maryland in Lagos, indicating that the company had been taken over by AMCON.
The order on the company’s office reads: “POSSESSION TAKEN TODAY 14/2/17 BY AMCON COURT ORDER ON SUIT NO. FHC/4CS/1139/2016
This brings to three the number of airlines the assets management company, AMCON, has taken over as it had confiscated AERO in February 2016.
The woes of these airlines may not be unconnected with the Federal Government’s intervention fund given to the airlines by the President Goodluck Jonathan administration as all three where beneficiaries of the scheme.
Meanwhile, Managing Director of AMCON, Mr. Ahmed Kuru, had last week during the briefing of members of the House of Representative’s Committee on Banking, Insurance and other Financial Institutions, offered reasons for the takeover of Arik Air.
Describing the action was inevitable and for the good of the airline and its staff, Mr. Kuru said the airline was seriously in debt.
He itemized the debt portfolio of the airline to include a whooping N167 billion obligation to AMCON, a position contrary to earlier claims by the airline’s former management.
In addition, Arik was said to also owe Nigerian banks another N165 billion, while its foreign debts has hit $81 million.
The airline, according to Kuru is owing over 2,000 staff seven months’ salary arrears. “Arik Air is owing up to seven months salaries to workers. They have refused to pay salaries and also refused to ensure that their loans are repaid. The first thing we did when we moved in was to address the payment of salaries of staff. Remember some of them were owed for up to seven months. The employees of the airline are very pleased with what we have done,” he stated.
He further revealed that the airline, despite having 30 aircraft, only operates 10. “We discovered that out of the 30 aircraft of the airline, only about 10 were functional. Some of them were not in Nigeria,” noted Kuru.
Blaming the takeover on the negligence on the part of the former management of Arik, Kuru said: “Despite all the things we have done to ensure that Arik Air stays in business, they have not done their part in meeting their own obligations. They have refused to meet all their obligations, even the insurance payment. They did not even have money to buy aviation fuel. What they did was that, they collected money from passengers and then quickly use the monies realized to buy fuel. This is how they have been running the place and these were some of the things we met on ground.”
Kuru, while further shedding light on the situation, debunked rumours of the Federal Government planning to use Arik’s fleet for a national carrier, saying the airline’s situation was too complicated for the Federal Government to handle.
Hear him: “The issue of converting the airline to a national carrier is not on the table. Arik is too complicated to make a national carrier. The total asset worth of the airline right now is less than N40 billion. Government does not have plans to do that. The interest of government is that, we must continue to fly and people must work. They have about over 2,000 staff.”
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Meanwhile, the General Secretary, National Union of Air Transport Employees (NUATE), Mr Olayinka Abioye, said the aviation unions were being cautious in their reaction to the takeover moves.
Expressing concern over the ability of the agency to manage the airline, Abioye said, “our position is that AMCON, which is an agency of government, has not been able to manage some of these firms the way we would have expected.
“We are not particularly pleased with the way AMCON has been managing Aero Contractors, and now it is coming to take over Arik,
“We just need to watch what is going to happen thereafter, and give them the benefit of doubt for now,” he told the News Agency of Nigeria (NAN) in an interview.
On his part, President, Aviation Round Table (ART), Mr Gbenga Olowo, blamed Arik Air’s woes on the harsh condition of doing business in Nigeria.
He warned that the takeover may extend to others. “We all saw it coming to Arik, and maybe others, more than a year ago.
“ART Quarter 1 breakfast meeting in 2016 appraised the very poor situation of Nigerian airlines and rose with an unambiguous communique on the way forward. This is still available on artng.org. he stated.
According to him, “treating the Arik case in isolation will be to trivialise the magnitude of the problem.
He stated that: “Going back to almost 40 years, the government airline – Nigeria Airways – failed; pioneer private airlines – Okada , Kabo, etc failed; third generation ADC, Bellview, Chachangi, Sosoliso etc failed; fourth generation Virgin Nigeria and Air Nigeria failed.
“Believe me, given the same Nigerian operating environment, the national carrier yet to be born will fail,” Olowo submitted.
Stressing that the failure of the airlines, essentially, is a function of the Nigerian business environment, he stated that business and government were permanently at variance, while cost was permanently higher than income.
“Tax overburden and infrastructural deficit erodes revenue steadily. Gazetted policies that will enhance performance are not implemented. Credit is not in Nigeria’s business dictionary. Yet, Aviation is prone to the most minute situation in the economy, ranging from weather to politics and reckless holidays,” Olowo stated.
A former President of the ART, Capt. Dele Ore, thinks the takeover of Arik Air portends gloom for the industry. “From experience, if care is not taken, that airline will be crippled for the next two years, he told journalist in Lagos.
According to him: “There will be too many interests and distractions. The boardroom politics, shareholders and ownership tussle will bog the airline down.
“So, my own fear is for our children, friends and colleagues who may be thrown out of jobs if things are not done properly.”
Capt Ore was critical of the owner and management of Arik Air saying they brought the situation upon themselves by not entrenching good corporate governance on the airline and its operations.
While stakeholders and observers are sceptical of the crisis currently bedevilling the aviation sector and the subsequent takeover by AMCON, the fact remains that experience has shown that the agency may not be the best option to rescuing the ailing airlines; neither is the suggestion of a national carrier.
It is obvious that if the necessary conducive environment is not created, the only way out in the not too distant future is to allow our airways to be taken over by foreign airlines.
