Arik Air’s Takeover: Real Reasons Exposed

Desperation of a powerful cabal in the presidency to float a national airline by all means may have led to the hostile takeover of the privately, owned carrier, Arik Air, last Thursday.

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

Citing the airline’s inability to service its debt portfolio and commitments to service providers, the airline’s operations was forcibly taken over with the help of armed policemen, barely 24 hours after the Economic and Financial Crimes Commission (EFCC) invited the chairman of the suspended board of the company, Sir Joseph Arumemi-Ikhide.

Justifying its action, the Asset Management Corporation of Nigeria, AMCON, said it considered Arik Air too critical in the aviation sector to be allowed to go under. The airline accounts for about 60 percent of the nation’s domestic passenger traffic.

Meanwhile, the suspended management of the company has vowed to challenge the action in court. A source privy to the multinational financial negotiations being pursued by the former management to recapitalize the airline, who spoke in confidence, however faulted official claims that the airline was on the brink of collapse before AMCON’s intervention last week.

“Contrary to the claims that Arik Air was owing 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 N90billion. For an airline valued independently at over $4billion 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 debt profile,’’ the banker said.

“The agenda is to bring together Arik Air and AERO to form what they call new national carrier and bring in Ethiopian Airway as technical partner. Can you imagine, going to bring a smaller country like Ethiopia to run a national carrier for Nigeria, the supposed Giant of Africa.

“If AMCON says the suspended management was incompetent, is it not ironic that the same AMCON few hours later named the deputy managing director of the same management it discredited as new CEO of Aero Contractor?

“It is an insult on the intelligence of the Nigerian public. 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? As a matter of fact, the suspended management was already scheduled to have a meeting with Afreximbank team in Cairo this week to finalize the negotiation of massive capital injection into ARIK to enable it refinance its debt,’’said the source.

Meanwhile, with the coming on board of the new managing director of Arik Airline, the AMCON has said it has discovered deep rooted rot at the airline which would require over N10 billion to fix before the largest local carrier before it would resume full and uninterrupted flight operations to its regular routes across the country and beyond.

The federal government under the auspices of AMCON had on Thursday taken over the airline over a debt profile of over N300 billion as well as appointing Capt. Poy Ukpebo Ilegbodu as its new managing director. According to AMCON, the condition of the airline was such that only nine aircrafts out of the 30 in the fleet of the airlines is operational.

AMCON in a statement yesterday said 21 of them have either been grounded, gone for C-check in Europe among other forms of challenges. “As if these problems are not enough, the airline does not have money to procure aviation fuel for the nine operational aircrafts because no dealer wants to sell aviation fuel to Arik if it is not on cash-and-carry basis.

“It was also discovered that Arik also owe its technical partners and also in perpetual default in its lease payments and insurance premium, leading to regular and embarrassing squabbles with different business partners, which accounts for why 21 aircrafts is off the fleet for different reasons.

“All these problems in addition to huge staff salaries, which have remained unpaid for 11 months; vendors that supply different items to Arik Airlines that are also owed meant that Nigerians may have to tarry-a-while to allow the new management clean up the huge mess at the airline before Arik would finally resume uninterrupted flight.”

AMCON and the new management of the local carrier called for public understanding as flight schedules may be realigned based on the nine aircrafts that are available, technically sound and ready for flight operation.

The chief executive officer of Arik Airlines, Capt. Ilegbodu, who is under the receivership of Mr. Oluseye Opasanya,  at the weekend reassured Nigerians that the issues “though daunting, would be gradually resolved to enable Arik Airlines, which carries about 55 per cent of the load in the country recover the 21 aircrafts.”