AMCON to restructure Arik Air for sale

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…Says no plans to make it national carrier

Nigeria’s “bad bank” said on Thursday it has taken over the day-to-day running of Arik Air in an attempt to rescue the country’s largest airline, which it placed in receivership last week after it was unable to pay workers and creditors.

The statement came after Mr. Michael Arumemi-Ikhide, the founder of Arik Air, said the government seized the airline to turn it into a “national carrier” and told Reuters he would challenge the move in court.

Arik Air, which controls around 55 per cent of the domestic market as West Africa’s biggest airline by passenger numbers, has been hard hit by currency crisis as its customers have to pay for fuel in dollars not naira.

Arik owes AMCON, around N147 billion and another N165 billion to four commercial lenders, AMCON’s Chief Executive, Ahmed Kuru, said in a presentation to lawmakers on Wednesday following the takeover.

Arumemi-Ikhide owed AMCON N263.7 billion from other businesses and Arik Air, it said. Arumemi-Ikhide was not available for comment on Thursday, while Arik Air declined to comment.

“We have deployed people there (at Arik) to manage it, pending when we can stabilise it and then bring in investors to take (it) over,” Kuru said, adding that AMCON would review the next steps after managing the airline “for about six months”.

Arik had wanted to expand internationally both to bring in more hard currency, as well as to cushion the impact of the economic slowdown at home, and was looking for new investors to help it grow rather than using debt.

However, AMCON said the state of the airline had turned off prospective investors, with only about 10 planes flying out of a fleet of 30 and total assets of less than N40 billion.

“Converting the airline to a national carrier is not on the table. Government does not have plans to do that. The interest of government is that we must continue to fly,” Kuru said.

Arik generates around N7 billion monthly but would need around N10 billion to stabilise it, Kuru said.

, adding he expected the airline to be able to repay the intervention monies within the next three months.

AMCON was thinking of suspending Arik’s international flights to save cost and focus on domestic routes, Kuru said.

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