One Owes $58M: FG Moves to Convert Two Airlines to National Carrier

• AMCON plans to merge the struggling airlines Arik Air and Aero Contractors into a single national carrier
• The two airlines are facing serious debt problems both locally and from international financial organisations
• A few months ago, Festus Keyamo suspended the Nigeria Air project, which was supposed to be the national carrier

Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

The Asset Management Corporation of Nigeria (AMCON) has announced plans to convert Arik Air and Aero Contractors into a single national carrier.

This decision comes as both airlines face substantial financial challenges and mounting debt.

Arik Air, once a flagship carrier in Nigeria, has been grappling with financial woes.

Read also

No more N13,500: FG moves to take action as dealers announce new cooking gas price

Similarly, Aero Contractors has struggled to stay afloat amid competitive pressures and a tough economic climate.

AMCON moves to recover debts

Gbenga Alade, AMCON’s Managing Director/Chief Executive Officer who disclosed the move, said that both airlines have accumulated so much debt that they might not be able to repay it.

Alade mentioned that the idea of merging Arik and Aero Contractors into a national carrier was proposed to a former aviation minister, but the suggestion was not accepted.

His words:

"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.”

He further explained that the previous AMCON management created a special purpose vehicle (SPV) to facilitate the conversion of these airlines into a national carrier, but it was sold off.

Read also

FG speaks on major oil deal as Nigerians battle fuel scarcity

“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 for this

"Believe me, it is a very difficult problem to resolve, and it is giving me sleepless nights, particularly Arik. Arik is owing so much that they cannot pay"

Details about the debt

Arik Air owes Afreximbank approximately $52 million, but after negotiations, the airline agreed to pay only $8.5 million, Punch reports

"However, where will that $8.5 million come from? AMCON doesn’t have the funds to cover it"

Alade explained that during the negotiations, there was a proposal to take some of Arik's engines as a final settlement of the debt.

He opposed this idea, arguing that it would cripple the airline. "The truth is, if they take those engines away, Arik is finished.

Read also

FG states new conditions for Dangote refinery to get crude supply, speaks on funding pipeline

AMCON boss added:

"No, we cannot allow you to take them. Let AMCON provide a bank guarantee instead."

Alade concluded by saying that AMCON is working diligently to keep Arik operational, with a plan to have three planes flying now and, hopefully, seven planes by February next year.

He added:

"We will push to have three planes flying now, and by the Lord’s grace, by February next year, we aim to have seven planes flying for Arik."

Air Peace, Azman Airlines lose $3 million to fraudulent firms

Legit.ng earlier reported that Airline Operators of Nigeria (AON) has explained that two of its members were victims of fraud by foreign leasing companies amounting to over $3 million.

The AON spokesman, Obiora Okonkwo, disclosed this following a recent media report that leasing firms have blacklisted 13 Nigerian airlines for breach of contracts.

AON disclosed that domestic airlines have remained committed to fulfilling their obligations with lessors and servicing Nigerian air passengers.

Read also

Minimum wage: Jubilation as N200k approved for workers, details emerge

Source: Legit.ng