Arik Air owes N312bn, $81m, AMCON tells Senate

The Asset Management Corporation of Nigeria (AMCON), on Wednesday, made shocking revelations on the financial state of the leading airline in the country.

Recall that AMCON, had last Thursday, announced the sack of the management of Arik Air and replaced it with a new one. According to AMCON, Captain Roy Ukpebo Ilegbodu, a veteran aviation expert, under the receivership of Mr. Oluseye Opasanya (SAN), will now manage Arik Airline

Managing Director of AMCON, Mr Ahmed Kuru who briefed members of the committee on Banking, Insurance and other Financial Institutions, Wednesday, revealed that contrary to earlier claims, the troubled airline is owing AMCON N147 billion.

He added that the airline is owing other local banks at least N165 billion with foreign debts standing at $81 million.

The AMCON boss also told the committee members that the airline is owing over 2,000 staff seven months salary arrears. He said negotiations were currently ongoing on how to immediately resolve the arrears.

He also revealed that the airline, despite having 30 aircraft, only operates 10. Kuru said prior to the interim take over of the airline, it could not meet its financial obligations.

According to him, the airline frequently relied on collection of ticket fees from passengers before they could buy aviation fuel. He partly blamed the incessant cancellation and delay of flight on the inability of the airline to buy aviation fuel.

Mr Kuru, while dismissing claims that the Federal Government was planning to make the airline a national carrier, said it was too problematic for any government to handle.

He said: “Despite all the things we have done to ensure that Arik Air stays in business. But they have not done their part in meeting their own obligations. Arik Air is owing up to seven months salaries to workers.

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“They have refused to pay salaries and also refused to ensure that their loans are repaid. We could not just sit back and allow an important airline with about 30 aircraft and covers 55 per cent of all routes in Nigeria to go down. From the records, Arik makes over N7 billion annually.

“We are talking to people to see how they can acquire the airline. They came. But when they saw the records of what was on ground, they decided to suspend everything, pending when we will resolve some of the issues bedeviling it.

“We have deployed people there to manage it, pending when we can stabilize it and then bring in investors to take over. We discovered that out of the 30 aircraft of the airline, only about 10 were functional. Some of them were not in Nigeria. 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.

“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 staff of the airline are very pleased with what we have done.

“We are hopeful that with an annual profit of about N7 billion and if the monies are not laundered, I think we can pay back the loans in time. AMCON debt is about N147 billion. There are local banks which Arik Air is owing about N165 billion. These banks collect all the monies they make.

“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 over 2,000 staff.

“They do not need more than N10 billion to stabilize their operations. Within the next three months, they will be able to pay back what we have put in right now. In national interest, Arik Air should be allowed to fly.”

Mr Kuru noted that within the next two to three weeks, the new management of the airline will put 15 to 16 back to the 18 nationwide routes.

He said: “Within the next two to three weeks, Arik Air should have up to 15 or 16 aircraft flying. Arik Air cannot compete internationally. They do not have the kind of services other airlines have.”

He also spoke on the suspension of international flights and noted that the airline spends N1.6 billion on aviation fuel to 12 international destinations. According to him, the airline currently lacks the capacity to carry out that function.

“We are thinking of suspending international flights. Arik Air needs about N1.6 billion to buy fuel for international routes. We cannot do that right now. By the time we manage it for about six months and the airline can now survive, then we can sit down and talk about where to go from there.

“Based on what we have achieved in just one week, we are hopeful that in the next three weeks, the issue of delayed or cancelled flights will be things of the past.

“We are carrying everybody along. At the end of the day, we want to return it to profitability. We need to emphasize one fact that the only way we can recover our debts is for Arik Airline to continue to fly. The banks have come to realize that this is important.

“Government has a responsibility to ensure that it intervenes whenever there is any threat to national interest. Within the next 30 days, we will be going to places we have not been to in the last three years.”

On their part, the lawmakers lauded the initiative of AMCON, but noted that it acted belatedly. Chairman of the committee, Senator Rafiu Ibrahim who spoke on behalf of other lawmakers, likened what he described as the mess in the airline to the alleged fraud perpetuated by the immediate-past National Security Adviser (NSA), Mr Sambo Dasuki.

He said: “Was the take over not done rather too late? From what you have given us, this is worst than Dasukigate. It appears what is happening in private sector is worst than that of the public sector.”

 

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