The Asset Management Corporation of Nigeria (AMCON) is exploring the possibility of merging Arik Air and Aero Contractors to establish a new national carrier. AMCON’s Managing Director/Chief Executive Officer, Gbenga Alade, disclosed this on Monday during an interactive session with media executives in Lagos.
Alade highlighted the severe financial challenges facing both airlines, noting that their debts are so substantial that repayment seems unlikely. He revealed that AMCON had previously proposed this merger to the former aviation minister, who rejected the idea.
“The former management of AMCON had presented the idea of converting Arik and Aero into a national carrier, but it was not accepted. We believe this is still the best option and will present it again,” Alade said.
He mentioned that although the special purpose vehicle (SPV) created by AMCON’s former management for this conversion had been sold, a new SPV could be established to facilitate the process.
This development comes against the backdrop of the controversial launch of Nigeria Air by former Minister of Aviation, Hadi Sirika, just days before the end of President Muhammadu Buhari’s administration. The ownership structure of Nigeria Air, which granted Ethiopian Airlines a 49% stake, sparked widespread concern. The House of Representatives described the venture as fraudulent and called for its suspension, a position echoed by the current Minister of Aviation, Festus Keyamo, who announced in August 2023 that the project was indefinitely suspended.
Meanwhile, a Federal High Court in Lagos recently nullified the sale of Nigeria Air to Ethiopian Airlines, effectively halting the Federal Government’s plans to establish the carrier. The court ruled in favor of the Registered Trustees of the Airline Operators of Nigeria and other aviation stakeholders who had challenged the deal.
Alade expressed deep concern over the financial plight of Arik and Aero Contractors, which he admitted has been causing him “sleepless nights.” He noted that Arik, in particular, owes significant debts, including $52 million to Afreximbank. Despite negotiations, the airline could only offer $8.5 million in settlement, a figure far below the outstanding amount.
Alade also revealed that international creditors had considered seizing some of Arik’s aircraft engines as part of the settlement. However, AMCON intervened, proposing a bank guarantee to prevent the airline from losing its assets. “If they took those engines away, Arik is finished,” he stated, emphasizing efforts to keep the airline operational with plans to have seven planes flying by February next year.
The ongoing debt crisis has also led to enforcement actions against Arik, including the grounding of its aircraft by the Nigerian Airspace Management Agency following a court order obtained by billionaire businessman Arthur Eze, who is seeking repayment of a $2.5 million debt.
AMCON has been managing both Arik and Aero Contractors since 2017 and 2016, respectively, after the airlines defaulted on their debt obligations. The corporation has been working to recover outstanding debts and has recently announced plans to engage international asset tracers to locate and recover assets hidden offshore by debtors, including those shielded by SPVs.
