The management of largest local carrier in Nigeria, Arik Air, which accounts for about 55 per cent of passenger load has been taken over by the Nigerian government through its Bad Bank, the Asset Management Corporation of Nigeria (AMCON), established in 2010 to efficiently resolve the non-performing loan assets of banks in Nigeria.
AMCON took over Arik’s non-performing loans running into tens of billions of naira a few years ago, in exchange for a stake in the ownership of the Airline.
The Agency today Thursday announced the dissolution of Management, and appointment of Receiver-Manager. The Airline will now be managed by Capt. Roy Ukpebo Ilegbodu, under the receivership of Mr. Oluseye Opasanya, SAN.
Following the development, the Minister of State for Aviation, Hadi Sirika, said the government’s decision to take over the management of Arik Airlines would stabilise its operations, enhance its long term economic value, revitalise its ailing operations, and sustain safety standards, in view of its pivotal role in the Nigerian aviation sector.
The Minister pledged the support of the Federal Ministry of Aviation for the new management to make Arik remain a strategic carrier, saying the intervention was in the best interest of the general public, workers, creditors and other aviation interest groups.
“All necessary steps have been taken to ensure that there would be no undue disruption on Arik’s regular business operations or activities of other stakeholders, on account of the recent changes in the leadership and management of Arik Airline,” the minister said.
The Bad Bank listed the issues leading up to the takeover as follows:
Arik Air is on the verge of collapse. On Wednesday February 8, 2017, Arik temporarily suspended flight operations to John F. Kennedy International Airport, New York, United States.
· Arik’s total debt profile: more than 300 billion naira — a large part of this is taxpayers’ funds in the form of bailouts.
· Arik constantly defaults in its lease payments and insurance, resulting in the regular confiscation of aircraft by lessors.
· Arik currently has more than eight aircrafts grounded for various reasons. This is one of the reasons for the flight delays and cancellations regularly suffered by customers
· Arik is owing staff salaries for several months. It has also been failing to remit tax deductions from workers’ salaries.
· Arik habitually flouts regulators’ directives
· Arik is perpetually bickering with Aviation Unions including the National Union of Air Transport Employees (NUATE), the Air Transport Senior Staff Services Association of Nigeria (ATSSSAN) and the National Association of Aircraft Pilots and Engineers (NAAPE)
AMCON said in in summary, Arik Air is on the verge of collapse and also posited its rationale for the intervention as:
· To enable Arik return to regular, undisrupted operations
· To avoid job losses
· To protect investors and stakeholder funds
· To rebuild the credibility of the Airline and its brand
· To ensure sure safety and stability in Nigeria’s already-challenged aviation sector.
AMCON stated that the key objectives of the new management will be to stabilize the operations and finances of the Airline; improve customer experience as well as sustain safety and reliability.
Meanwhile, the new management of the airline has assured both the staff and other interest groups that it would work to add value to its operations, improve customer experience, and sustain the safety, reliable and secure operational history it was known.
Prior to the takeover, operatives of the Economic and Financial Crimes Commission, EFCC, on Wednesday, stormed the head office of the airline, to meet with its Chairman, Joseph Arumemi-Ikhide.