Nigeria: Can Aero and Arik Air Survive?

28 May 2017
opinion

The Asset Management Company of Nigeria's (AMCON) belated rescue operation of Arik Air and Aero contractors will have very little effect on the survival prognosis of the two airlines. It is a known fact that getting an airline out of insolvency is the hardest feat in financial algorithm.

The cost of getting either Arik or Aero out of their present lifeless state, will be higher than floating a fresh airline. And, AMCON has two choices: (1) to sell the carriers at their present peanut- market values, or (2) inject, at least, N10b into each company to stimulate operational growth. Arik needs the funds to offset most of its external debts; and prevent multiple domestic creditors' encumbrances of its assets, including most of the aircraft. On the other hand, Aero will require more than five serviceable airplanes to bounce back to business, sustain its brand, and or, attain a feeble breakeven -point-- at best, gain nominal profitability.

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