The Asset Management Corporation of Nigeria (AMCON) has proposed merging Arik and Aero Contractors airlines and transforming them into a national carrier.
AMCON’s Managing Director/Chief Executive Officer, Gbenga Alade, revealed this plan during an interactive session with media executives in Lagos on Monday.
Alade explained that both airlines are heavily indebted and may be unable to repay their debts. He disclosed that AMCON had previously presented the idea of converting the two airlines into a national carrier to the former aviation minister, but it was rejected.
The proposed merger and transformation aim to address the airlines’ financial challenges and potentially create a stronger, more sustainable national carrier.
“The former management of AMCON presented the idea of converting Arik and Aero to a national carrier. But the former aviation minister did not buy the idea. We will present it again because that is the best option.
“Unfortunately, the special purpose vehicle that was created by the former management of AMCON for the conversion of Arik and Aero to a national carrier had been sold. But we can create another SPV this,” he explained.
Recall that the former Minister of Aviation, Hadi Sirika, launched the Nigeria Air three days before the end of former President Muhammadu Buhari’s administration.
The development had elicited concerns among stakeholders over the ownership arrangement which gave Ethiopian Airlines a 49 percent equity stake in the company.
The Federal Government had a 5 per cent equity, while a consortium of three Nigerian investors had 46 per cent.
In June 2023, the House of Representatives urged the Federal Government to halt Nigeria Air operations, calling it a fraud. By August 2023, Minister Festus Keyamo announced the suspension of the national carrier project, clarifying that it was not Air Nigeria but a venture involving Ethiopian Airlines. Keyamo emphasized that a truly Nigerian national carrier should be entirely indigenous.
A recent Federal High Court decision in Lagos halted the sale of Nigeria Air to Ethiopian Airlines, declaring the transaction null and void and stopping further plans for the national carrier. This judgment favored the Airline Operators of Nigeria and other aviation stakeholders.
At a recent briefing, Alade expressed concern over the troubled status of Arik and Aero Contractors, particularly Arik, which is heavily indebted. He revealed that Arik owes Afreximbank $52 million but was only able to negotiate $8.5 million for settlement. He stressed the need for AMCON to provide a bank guarantee to avoid crippling the airline further. Additionally, the Nigerian Airspace Management Agency (NAMA) had grounded Arik’s aircraft due to a court order related to unpaid debts.
AMCON took over Aero Contractors in 2016 and Arik Air in 2017 due to debt issues, with ongoing efforts to recover and manage these airlines amid financial difficulties.
