AMCON takes over Arik Air Over N300m Debt

The Federal Government, through the Asset Management Corporation of Nigeria, on Thursday took over the operations of the nation’s biggest carrier, Arik Air, and appointed Capt. Roy Ukpebo Ilegbodu as its new manager.

It was gathered that the beleaguered airline was indebted to alone to the tune of over N300bn, with AMCON alone owed N135bn; while its obligations to aviation fuel suppliers, insurance firms, aircraft maintenance organisations, the Federal Government and the various aviation agencies, as well as food vendors made up the balance.

Officials of the aviation arm of the Federal Ministry of Transportation and AMCON confirmed on Thursday that Arik was immersed in a heavy financial debt burden that was threatening to permanently ground the airline.

AMCON stated in a statement that for some time now, the airline, which carries about 55 per cent of the load in the country, had been going through difficult times, attributable to its bad corporate governance, erratic operations, inability to pay staff salaries and heavy debt burden, among other issues.

This, it said, led to calls on the government to intervene before Arik would go under like many before it.

It stated that the takeover, which underscored the government’s decision to instil sanity in the nation’s aviation sector, had prevented a major catastrophe that would, among other factors, protect and preserve Arik Air as a going concern.

The development, AMCON said, would afford Arik to go back to regular and undisrupted operations, avoid job losses, protect investors and stakeholders’ funds as well as ensure safety and stability in the already challenged aviation sector.

“The airline will now be managed by Capt. Roy Ukpebo Ilegbodu, a veteran aviation expert, under the receivership of Mr. Oluseye Opasanya SAN,” AMCON said in the statement.

Explaining the reason for the takeover, the Minister of State for Aviation, Senator Hadi Siriki, was quoted to have said, “We believe that this appointment (of Ilegbodu) is timely and will stabilise the operations of the airline.

“This will enhance the long-term economic value of Arik Air and revitalise the airline’s ailing operations as well as sustain safety standards in view of Arik Air’s pivotal role in the Nigerian aviation sector.”

The minister pledged that the Federal Ministry of Aviation would support the new management of the strategic carrier, adding that all necessary steps had been taken to ensure that there would be no undue disruption to Arik’s regular business operations or activities of other stakeholders on account of the change in the leadership and management of the airline.

Ilegbodu also assured both the staff members of the airline and all other stakeholders that his appointment would enhance the value of the airline, improve customer experience, and sustain the safety, reliable and secure operational history of the airline before all those were eroded.

AMCON said, “Yesterday (Wednesday), Arik temporarily suspended its flight operations to the John F. Kennedy International Airport, New York, United States, claiming that the two Airbus A330-200 aircraft dedicated to the route have been taken to France for C check at the same time. Equally, more than eight aircraft are currently grounded at the tarmac, making it difficult for the carrier to meet its routine commercial flights.

“The myriad  issues confronting Arik Air of late range from confiscation of aircraft due to non-payment of leases, frequent flight delays, constant fracas between Arik staff and irate passengers at both local and international airports, etc. During the last Yuletide season, passengers were stranded in airports all over the country due to Arik’s incessant flight delays and cancellations, which negatively affected the preference it enjoys from passengers.”

It added that the airline was so overwhelmed that the workers’ wages were not paid for several months, leading to occasional confrontation between the management of Arik and different aviation unions in the country.

AMCON said it was Arik’s inability to pay its workers for seven months that forced the United Labour Congress and the engineers’ union to recently shut the offices of the airline across the country, causing untold hardship to thousands of travellers and an embarrassment to the aviation sector in the country.

“Besides owing workers’ salaries, the airline has also not been remitting the taxes of workers to relevant bodies thus, defrauding the country. The airline is also in perpetual default in its lease payments and insurance premium, leading to regular and embarrassing repossession of its aircraft by lessors. Various class actions are pending against the airline all over the world,” the corporation added.

It, however, assured all stakeholders that its intervention was in the best interest of the general public, workers, creditors and other aviation interest groups.

EFCC quizzes Arik chair

Operatives of the Economic and Financial Crimes Commission had on Wednesday visited Arik Air’s head office and briefly quizzed its Chairman, Mr. Joseph Arumemi-Ikhide.

The airline, in a statement signed by its Public Relations and Communications Manager, Adebanji Ola, said Arumemi-Ikhide later visited EFCC’s Ikoyi, Lagos office for further discussions and to respond to the agency’s enquiries.

“Having satisfactorily answered the query, the chairman later left the EFCC office,” the airline said.

Arik Air history

Arik Air was registered in 2002 and commenced operations in 2006 with its headquarters at the Murtala Muhammed International Airport, Lagos and a hub at the Nnamdi Azikiwe International Airport, Abuja.

Also in 2006, the airline took over the assets of the defunct national carrier, Nigeria Airways, in Lagos, three years after it was liquidated, and took delivery of three new Bombardier CRJ900 aircraft to operate on domestic routes as well as within West Africa.

In 2008, the airline launched its first long-haul flight between Lagos and London Heathrow with an Airbus A340-500, while in June 2009, it commenced flights to its second long haul destination in Johannesburg, South Africa and other West African nations, including Sierra Leone, Senegal, The Gambia, Benin Republic and Ghana.

The airline launched its New York route in 2009 with non-stop flight services three times a week.

According to the airline, it operates an average of 120 flights daily from its two hubs in Lagos and Abuja with a fleet of 28 aircraft.

Controversies

Arik has in recent times been in the news for negative reasons, from suspension of service on some routes to delays and outright cancellation of flights.

The situation came to a climax in late December 2016 when some of its aggrieved passengers from New York, whose luggage were left behind in the United States for several days, prevented the airline’s London-bound passengers from checking in for three days.

The airline had blamed the delay in ferrying the passengers’ luggage on a faulty aircraft and poor weather condition.

Prior to this, aviation unions had shut down the airline’s operations on December 20 for failing to pay its workers for over seven months.

In January, Arik Air’s Customer Service Liaison Manager, Andrew Umogbai, was beaten up by angry passengers after a flight from Lagos to Johannesburg was cancelled for three consecutive days without explanation.

We’ll challenge decision in court – Arik

While reacting to the takeover, the management of Arik Air said it would challenge the decision in court.

The Deputy Managing Director of the airline, Captain Ado Sanusi, told journalists on Thursday during a briefing with the AMCON-appointed receiver manager that Arik had agreed to comply with the order but would challenge the decision in court.

Sanusi said the airline agreed to the takeover so that its operations would continue.

He added, “We were served with the court order this morning, Arik Air will comply with the order. The airline has the right to challenge the order and will.

“We may disagree on certain issues, but we have agreed that air operations should continue and not be paralysed. We will make our position known to our various stakeholders and partners, but we will challenge this order to the highest level.”

Opasanya said he had addressed the workers on the new development and the need to keep the airline flying as there were many Nigerians under its employment.

He added that AMCON would reach out to the airline’s creditors, both foreign and local, and secure their cooperation and commitment.

Culled from Punch newspaper