13 February 2017

Nigeria: Govt Accused of Using Arik's Take Over As Ruse to Set Up National Carrier

Photo: Premium Times
Arik Air.

The Association of Concerned Aviation Professionals (ACAP) has expressed alarm at the brazen take over of Arik Air by the Asset Management Corporation of Nigeria (AMCON) on behalf of the federal government, describing the foremost local carrier as a private concern, which accounts for over 60 per cent of domestic passenger traffic in the country.

The group, in an advert published today in THISDAY, said there was a lack of sincerity in AMCON's action, accusing it of pursuing a selfish agenda to foster the federal government's desire to establish a national carrier through subterfuge.

The uproar over the take over of the airline has not been limited to professionals in the aviation sector, as the Senate, THISDAY learnt, has also indicated that the Senate Committee on Aviation would hold a public hearing on AMCON's court-ordered intervention last week.

Citing the airline's inability to service its debt and meet its obligations to service providers, AMCON forcibly took over its operations with the help of truckloads of armed policemen, barely 24 hours after the Economic and Financial Crimes Commission (EFCC) had invited the chairman of the suspended board, Mr. Joseph Arumemi-Ikhide.

The suspended management of the company has vowed to challenge the action in court.

ACAP cited the propaganda that was being fed to the public by AMCON, including the figures being bandied about as Arik's debts and the allegation that the airline owed eight months salaries before its take over last week, whereas its workers, the group said, had confirmed they were owed only two months salary.

"We know that the airline has faced some challenges lately and some passengers have even expressed concern about its services. But cutting off the head is not the cure for a headache," the association said in a statement signed by Justin Nwokolo, secretary of ACAP.

ACAP alleged that the action of AMCON was to preempt a crucial meeting the suspended management of the airline was scheduled to have with Afrexim Bank in Cairo, Egypt, this week on a loan facility to refinance its operations, which have been hampered by the forex crisis.

According to the association, "We strongly believe this course of action is motivated by the pursuit of a cabal's selfish interest masquerading as public good with the deployment of a ruthless propaganda machine to give it a gloss.

"How laughable that the same Asset Management Company of Nigeria (AMCON) hired the erstwhile Deputy Managing Director of the same management it accused of 'poor corporate governance' as new CEO of AERO Contractors on the very day it forcibly took over the company. Who is fooling who?

"The agenda is to bring together Arik Air and AERO to form what they call a new national carrier and bring in Ethiopian Airways as technical partner.

"What a shame! We bring a smaller country like Ethiopia to run a national carrier for Nigeria, the supposed Giant of Africa? If government could run an airline, Nigeria Airways would not have gone under."

ACAP added that it was aware President Muhammadu Buhari had made it clear to government officials behind the agenda that it would be gravely unjust and ungodly to take over anybody's business under whatever guise.

"In the interest of justice, the public needs to be enlightened on the genesis of AMCON's dispute with the suspended management of Arik Air over the size of the debt owed.

"Following the financial crisis of 2008/2009, AMCON paid money to conniving banks on behalf of 'debtor companies' under circumstances that were anything but transparent without the management of the said 'debtor companies' being carried along.

"It explains why whereas AMCON was bandying the figure of N135 billion as Arik Air's exposure, what was finally arrived at after a clinical audit came to around N90 billion.

"While AMCON speaks so magisterially on 'sound management' today, it is as if the operating environment for businesses had been perfect all along.

"Things have been so difficult that airlines have had to fly to neighboring countries like Ghana to procure something as basic as aviation fuel.

"If AMCON itself is a good business manager, how come AERO, which had nine aircraft when AMCON took it over five years ago, now has only two aircraft in its fleet?

"With the massive devaluation of the naira by the CBN in the ongoing recession, Arik Air's operations which are heavily dependent on forex have been negatively impacted.

"We believe the action of AMCON was to preempt a crucial meeting the suspended management of the airline was scheduled to have with Afreximbank in Cairo, Egypt this week to unlock massive capital injection to refinance its operations, which had been hampered by the forex crisis.

"Rather than crucify a local investor who is patriotic enough to go into aviation at a time the sector was in disarray and planes were virtually falling off the sky, we believe the reasonable and fair thing to do is for government to support such individuals," the association stated.

It called on the federal government to call off the siege on Arik and expressed hope that the National Assembly will intervene as a patriotic national duty.

It also accused the "powerful cabal" in the presidency of taking advantage of the president's absence to hatch the plot, as efforts to sell the take over of Arik in the past to form the nucleus of "the so-called national carrier" did not receive a positive response from him.

Also, a top banker who is privy to the financial negotiations that were being pursued by the former management to recapitalise the airline, faulted official claims that the airline was on the brink of collapse before AMCON's intervention last week.

He said: "Contrary to the bogus claims that Arik Air owes over N300 billion, I am aware that in the last reconciliation between the suspended management and AMCON, the figure agreed was in the neighbourhood of N90 billion.

"Besides, for an airline valued independently at over $4 billion by a world renowned valuer like Deloitte of London, I do not think that the company could be regarded as a bad case with such a debt profile.

"Some powerful interests are just desperate to call a dog a bad name in order to hang it.

"The agenda is to fuse Arik Air and AERO to form the national carrier and bring in Ethiopian Airways as technical partner.

"They said N90b provided by AMCON was to buy back the loan provided by Union Bank to acquire two brand new A340 Airbus aircraft used for international flights by Arik.

"So, it is most unfair to accuse the promoters of Arik of mismanagement when everyone knows that the economy is in distress and even foreign airlines have had to downgrade their operations in the country due to the hostile environment."

Similarly, many aviation stakeholders considered AMCON's action too high-handed considering that the suspended management of Arik Air had helped to raise safety standards in the industry in the last decade.

Arik has also been credited with facilitating Nigeria's certification with a Category One status, thus opening the international routes for Nigeria's privately owned airlines.

Only recently, ARIK became the third airline after South African Airways and Ethiopia Airlines to be certified in Africa by the Israeli secret service, MOSSAD, to fly directly to Tel Aviv.

AMCON Goes on the Defensive

However, as the outcry over AMCON's action gathers pace, sources close to the corporation have alleged that so far over N300 billion was reported to have been discovered since the federal government took over the management of the airline through AMCON on Thursday.

They maintain that the beleaguered airline would have stopped operations this week had AMCON not stepped in to take over the management.

One source said the airline was swimming in debt and there was no headway for it, as it was bereft of cash.

The source also noted that more debts would be unravelled as the receiver manager and his team continue to scrutinise the books.

Also, AMCON's public relations consultant and ‎ CEO of SY&T Simon Tumba said in a statement that within 48 hours of intervention by the government, Arik Air was getting assistance to continue with smooth flight services.

THISDAY also learnt that virtually all of Arik's trade creditors were being owed, staff salaries had not been paid, and of the 28 aircraft in Arik's fleet, only 10 are in operation.

AMCON also yesterday said it had discovered deep-rooted rot in the embattled airline, adding that it would require over N10 billion to fix the rot before Arik can resume full and uninterrupted flights to its regular routes across the country and beyond.

A statement by AMCON's spokesman, Mr Jude Nwauzor said that "the situation was so bad that only nine aircraft out of the 30 in the fleet of the airline were operational".

According to the statement, 21 of them had either been grounded, or gone for C-check in Europe, among other forms of challenges.

"As if these problems were 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.

"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," it said.

AMCON said it was discovered that Arik also owes its technical partners and was in perpetual default on its lease payments and insurance premiums, leading to regular and embarrassing squabbles with different business partners.

"All these problems, in addition to unpaid staff salaries, which have remained unpaid for 11 months; vendors that supply different items to Arik Air that are also owed, it means that Nigerians may have to tarry a while to allow the new management clean up the huge mess at the airline before Arik can finally resume uninterrupted flights," it said.

The statement quoted the AMCON appointed managing director, Captain Roy Ukpebo Ilegbodu as reassuring Nigerians that these issues, though daunting, would be gradually resolved to enable Arik, which carries about 55 per cent of the load in the country recover the 21 aircraft.

According to him, once all the aircraft are back, Arik will within the shortest possible time regain its pride of place as a leader among the comity of airlines in Nigeria.

He reiterated that the intervention at Arik clearly underscored government's decision to instill sanity in the nation's aviation sector, adding that the move also prevented the major disaster that would have befallen the airline.

AMCON further added that the new management had settled the insurance cover for the aircraft that would have expired on February 12 and also met with different trade creditors and aggrieved staff.

It called for public understanding, as the management begins the tough job of ensuring that Arik is returned to full operational capacity within the shortest possible time.

More on This

Arik Air Was 'Huge Mess', Very Poorly Managed - Amcon

The Asset Management Corporation of Nigeria, AMCON, on Sunday said it had discovered deep rooted rot at embattled… Read more »

Copyright © 2017 This Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 700 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.