The Asset Management Corporation of Nigeria (AMCON) is considering the merger of Arik Air and Aero Contractors, potentially transforming them into a national carrier. Gbenga Alade, AMCON’s Managing Director/CEO, revealed this during a media briefing in Lagos on Monday.
Alade explained that both airlines are heavily indebted, raising concerns about their financial viability. He mentioned that a previous proposal to convert Arik and Aero into a national carrier was rejected by the former aviation minister but intends to revisit this option, as it appears to be the best solution.
Alade also noted that the special purpose vehicle (SPV) created for this conversion had been sold, but he expressed confidence in establishing a new SPV to facilitate the merger.
The discussion follows the recent controversy surrounding Nigeria Air, which was launched by former Aviation Minister Hadi Sirika shortly before the end of President Muhammadu Buhari’s tenure. The project faced criticism over its ownership structure, with Ethiopian Airlines holding a 49% stake, while the Federal Government had 5% and a consortium of Nigerian investors held 46%. The House of Representatives labeled the deal as fraudulent in June 2023, leading to the suspension of Nigeria Air by the current Minister of Aviation, Festus Keyamo, in August 2023.
A Federal High Court in Lagos recently halted the sale of Nigeria Air to Ethiopian Airlines, declaring the transaction null and void following a lawsuit by the Airline Operators of Nigeria and other stakeholders.
At the briefing, Alade expressed concerns over the severe financial challenges facing Arik Air, which owes significant sums to international creditors like Afreximbank. He revealed that negotiations had reduced the debt from $52 million to $8.5 million, though securing this amount remains problematic.
AMCON’s efforts to resolve the debt issues include engaging international asset tracers and working with various stakeholders to recover hidden assets and address non-performing loans. Alade highlighted that since the new management’s takeover, they have recovered approximately N100 billion from high-profile debtors and revised the sale of certain assets.
The AMCON CEO also outlined plans to tackle asset issues in the oil and gas and power sectors, emphasizing that improvements in these areas could boost production, generate foreign exchange, and create jobs. Additionally, AMCON aims to revive dormant assets in telecommunications to enhance operational efficiency.
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