Uche Usim, Abuja
Two years after the Asset Management Company of Nigeria (AMCON) appointed an interim management for financially-ailing Arik Air which was at the brink of collapse, the Federal government and aviation experts have hailed the move, saying it brought the local carrier back to life and saving up 2,600 jobs.
Arik Air which at its height, accounted for about 55 per cent of national-passenger traffic, groaned under a huge debt burden and had not paid its staff for months prior to AMCON take-over.
The airline also owed huge debts to local and foreign creditors and could not afford critical aircraft spare parts or pay for other aspects of maintenance.
Its multifarious debts included $300m which it owed banks, suppliers and other creditors as well as N10 billion in capital inadequacy.
A seasoned aviation consultant and Chief Executive Officer of Belujane Konzult, Chris Aligbe said if AMCON had not come in, there was every reason to believe the airline would have totally collapsed by now.
He said: “Yes, it was good AMCON took over the airline the time it did to rescue it. That is what creditors do. They don’t pray that their debtors die because they would lose their investments.
“But AMCON does not have the requisite competence to run the airline, hence it appointed a receiver and has kept the financial management in check.
“I pray the real owners get an investor to pay off AMCON and repossess the airline so it can implement its long-term vision and mission which AMCON is not concerned with, other than recovering its money”, Aligbe said.
Another expert, Roland Iyayi, the CEO of Topbrass Aviation also said AMCON takeover saved the airline from further haemorrhage and the concomitant job loss.
“It was able to stop the bleeding which would have eventually killed the airline,” he said.
Recall that upon the take-over of Arik Air, AMCON appointed Roy Ilegbodu, the new Chief Executive Officer/Head of the Receiver Managers Team.
Ilegbodu said: “AMCON did not just jump into Arik. We bought these loans in 2011 and 2012 and after buying the loans, we gave Arik N20billion, additional landing to help them rejuvenate. So, talking about putting Arik in a position to pay its debt, we did that several years before we decided to appoint a receiver manager to intervene. So, where we are now is a different recovery level.
He added: “The initial recovery level was pursuing to build capacity and let them repay but where we are now is to build capacity and exit. How you exit can take different forms, and we have people in AMCON that are working on that.”
Months before its takeover, between September and December 2016, Arik operations were completely grounded because it could not pay for aviation fuel and other basic services.
Before then, its service delivery image was dented by sudden flight cancellations, delayed flights and widespread complaints of pilfering from passengers’ luggage and a host of other negatives.
Two years after Arik was handed over to the receiver manager, the prospects of the airline are significantly brighter.
From a fleet of six aircraft, the airline now operates 17 aircraft which convey 5,000 passengers daily, up from 1,400 at the point of takeover.
Industry watchers say AMCON’s intervention was timely.
The first step AMCON took was to buy up Arik’s bad debt to the tune of N13 billion and pumped in N20 billion to shore up Arik’s operations in order to empower its management with the resources to get the airline in a good position to make progress.
But after five years, the capital injection is yet to yield the desired results.