Aviation experts are of the opinion that considering the debts owed by Arik Air, stakeholders others than the Asset Management Corporation of Nigeria are needed to revive the airline and bring it back to profitability.
AMCON had said that the Capt. Roy Ilegbodu-led management, under the receivership of Mr. Oluseye Opasanya was already surmounting the problems it inherited in the airline to stabilise operations with the few aircraft on its fleet. But some experts in the industry, who spoke with our correspondent on Tuesday, stated that the corporation alone might not successfully repackage the airline.
The Chief Executive Officer, Centurium Aviation Services, Group Captain John Ojikutu (Retd.), said that with a debt of over N300bn and an operational cost of about N20bn annually, AMCON might not be able to get Arik out of its present debt mess.
Ojikutu stated that foreign technical partners, the Nigerian Stock Exchange and other private sector investors within the country should be involved.
He said, “If government does not want the airline to add to its woes, it must get foreign technical investors that will take 60 per cent of the assets and pay for it; sell 30 per cent to the public in the Nigerian stock market and sell the 10 per cent balance to Nigerian big investors.
“How can AMCON and its team get Arik out of the wood of N300bn when at full blast before now, Arik earnings annually were about N65bn to N70bn while its operational cost including salaries, period maintenance is about N60bn?
“How would AMCON manage this debt of 300bn with annual spending of about N40bn from a reduced operation through a team that has not managed a N50bn business before now, particularly in a complex environment like the aviation sector?”
Ojikutu said if relevant stakeholders failed to come in to assist AMCON, Arik might be grounded in the next two to three years.
AMCON recently said Arik Air and the other firms belonging to its principal promoter, Johnson Arumemi-Ikhide, were indebted to it to the tune of N263.7bn, apart from the different amounts owed other creditors and members of staff in the form of salary arrears.
The corporation said total recoveries from the airline till date amounted to N4.6bn, which was only 3.2 per cent of the current debt.
The airline is also said to owe federal aviation agencies and regulators N26bn; European aviation agencies and services providers, $11m; European aviation and Lufthansa Technique, $20m, among others, including funds owed passengers whose flights were cancelled.
The Chairman, Aviation Roundtable, Gbenga Olowo, gave the three important stakeholders that should help the airline to get back to business as AMCON, the NSE and the Nigerian Civil Aviation Authority.
“Unfortunately, there is nothing anyone can do without involving AMCON; the corporation is in charge of assets in Nigeria and the banks that give money to these airlines; AMCON has to take care of their interest. So, AMCON is necessarily a party to be involved in the restructuring of the airline,” he said.
Olowo said experts in the industry had reflected on the weak airlines and suggested that the country needed two to three strong airlines to be ‘midwifed’ by AMCON, the NSE and the NCAA.
He added, “Their roles would be to see what the problems are, why the airlines are dying and not able to pay all their bills, which is a fundamental problem; and then look for ways to package them. It is not about resorting to foreign investors. Richard Branson was here but he failed. So, there is no magic any foreign airline or investor is coming to perform here if the fundamentals are not addressed. We have identified them many times.
“Once these three stakeholders sit together, they should look for a way forward. The NSE is needed; the NCAA for regulation; and of course, AMCON, which is in charge of money; all the borrowings of the airlines have a lot of foreign exchange content and with forex catapulting all the time, what you borrow is not what you pay back, so AMCON is needed but the corporation alone cannot successfully repackage the Arik if you look at the airline’s assets and liabilities.”
An industry consultant and Chief Executive Officer of Belujane Konsult, Chris Aligbe, said the airline was in distress and might not be in state where it could be taken to the NSE presently, but that all the relevant stakeholders must sit and determine the way forward for the airline.
“AMCON is not the only stakeholders and so, should not be left to handle all the airline’s affairs. They don’t have the competence to do that; if they continue, Arik will collapse. What the airline needs is a turnaround management, which all the stakeholders must determine,” he said.
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