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Reports suggest Ethiopia Air may soon run Arik

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Ethiopian Airlines

Reports from Nigeria’s local newspaper, Thisday suggest Ethiopian Airlines is in advanced negotiations with the Asset Management Company of Nigeria to take over nationalised Airline, Arik Air. Thisday reports, the deal has been in the works for month’s now with Nigerian officials visiting Ethiopia and vice n versa.

The nuggets

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  • AMCON is offering Ethiopian Airlines a management contract that will see it manage the operations of Arik.
  • No monetary proceeds is expected to accrue to AMCON from this deal being a management contract. Thisday did not report if the fees payable to Ethiopian Airline has been agreed.
  • The initial plans was to “handover” Arik to Ethiopian Airlines but the potential backlash and controversy surrounding such a deal killed off any possibilities of such a deal. Also, the hostility and threat of the previous management of Arik was considered bad for optics of any such takeover
  • The management contract will involve Ethiopian airlines seconding some of its technical and management staff to Nigeria to run the airline. It will also include a code share arrangement.
  • A code Share is essentially two or more airlines share the same flight where a seat operated by Airline A can be purchased from Airline B. For example, you buy a British Airways ticket but fly Iberia Airline, and American Airlines en-route to your destination all on the same ticket.
  • Critics of this potential deal point to the Virgin Atlantic/Virgin Nigeria deal as a likely not benefiting Nigeria. They claimed Ethiopian Airline like Virgin will simply route traffic to their airlines without a commensurate benefit to Nigeria
  • Supporters of the potential deal believe, Arik without a deal like this is essentially dead and that this could be the lifeline Arik needs.
  • More from Thisday

AMCON made a loss of N351 billion for the period ended December 2016, mostly due to losses from its subsidiaries.

Arik air was founded in 2002, but commenced operations on the 30th of October 2006. In addition to flying within Nigeria, Arik also flies to several African countries including South Africa, Angola, Ghana and Liberia. AMCON took over the airline in February 2017.

Preliminary results from an audit show the airline has liabilities running into hundreds of billions of Naira, to parties within and outside the country.

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AMCON was founded in 2010 to take over of bad loans from various commercial banks in the country. The bad bank has a lifespan of 10 years ending in 2020. MD of the bank, Ahmed Kuru had foreclosed the possibility of the extension of its tenure.

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Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via [email protected]

1 Comment

1 Comment

  1. Anodebenze

    June 10, 2017 at 3:25 pm

    Arik ailine have a lot of problem.the first problem is that the board and the management personalized the company.it is managed subject not objectively.thet ignore the principle of running a business,the amcon should appoint a business consultant to review their operation with a clear business aim(2) they lost focus on their goal and aspiration(3) they should have given more power to the company,gives more value/a better trained staff/increases visibility they should have a short term,a medium term and long term business plan.
    The short term is that,they had enter a virgin market,with no experiences in running an airline,they took over Nigerian airline overseas routes.i.e they should have seeks professional skill and opnion,maybe former Nigerian airways executive,also they should have pursued a massive sales driven,marketing and advertisement.they would have watches their operation daily,once they had establishes their niches,they should have a medium business plan. i.e,consolidation.cuting cost,expand slightly to fortifies their bases.with this reviewing medium businessplan,they will expand be able to compete with other airline.i.e would have seen new business.opportunities either through new routes or ventures or innovation
    Arik was expanding due to bank loan not due to sales.they would have be able repair and services their plane solely in Nigeria,they would have seen when and what need to be done they,will able to restructure their debt.do they need to borrow more to cut their airline ticket fee,as the customer is the king in sales.they would have asked the govt to give them some protecting to increases sales or protect their market,and govt would have given some condition

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Companies

Africa’s largest telecoms firm, MTN, to divest from its Middle East operations

The MTN Group is in advanced talks to sell its stake in MTN Syria to the minority shareholder.

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Africa’s largest telecoms firm, the MTN Group, has announced its plans to exit the Middle East. This is part of the wireless carrier’s strategic plan to shift focus entirely to its home continent, Africa.

The mobile operator said that as part of its medium-term strategy, it will be leaving the Middle East, starting with the sales of its 75% stake in MTN Syria. Overly reduced revenue from war-torn Syria and the complex nature of the operating environment in the country are part of the reasons MTN is divesting.

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READ MORE: MTN seeking to sell stake in Jumia Technologies AG

MTN’s Chief Executive Officer, Rob Shuter, noted during a conference call with reporters, that “the Middle East environment is becoming increasingly complex and it contributes less to the group’s earnings.’’

Shuter disclosed that the disposals in the Middle East region will be done in a phased manner, with its 3 consolidated subsidiaries in Yemen, Afghanistan, and Syria earmarked to be sold first. These markets only contribute about 4% to the group’s earnings before interest, depreciation, taxation, and amortization.

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READ ALSO: Why MTN is being dragged to court by families of American soldiers 

The MTN Group is in advanced talks to sell its stake in MTN Syria to the minority shareholder, TeleInvest, who has 25% stake in the firm, according to the CEO. He believes that the telecoms firm is better served to focus on its Pan-African strategy and simplify its portfolio by leaving the Middle East region in an orderly manner.

In the medium term, the group will also dispose of its 49% stake in MTN Irancell, one of its largest markets.

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The South African firm plans to exit the entire portfolio in time, which will then leave it with 17 subsidiaries in Africa.

Just yesterday, Nairametrics reported about MTN’s plan to sell its stake in Jumia Technologies. MTN will also be divesting from telecommunications infrastructure firm, IHS Towers. The divestments from Jumia and IHS Towers were informed by the decision to raise funds in order to reduce MTN’s debts. It will also help the company to refocus its operations.

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Airtel and Telkom discontinue merger plans

The disclosure was made in a notification that was sent to the Nigerian Stock Exchange.

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Raghunath Mandava, MD and CEO of Airtel Africa, Airtel Africa receives NCC approval to acquire 10 MHz spectrum for $94 million

Telecoms giant Airtel Africa Plc and Telkom Kenya Ltd have decided to discontinue the completion of their merger plans due to the lengthy process of the transaction which has been on since February 2019.

The two telecom firms resolved not to complete the business combination despite their respective efforts to reach a successful closure and having it drag on for a while.

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The disclosure was made in a notification that was sent to the Nigerian Stock Exchange (NSE) by Airtel Africa and signed by its Group Company Secretary, Simon O’Hara, on Wednesday, August 5, 2020.

A subsidiary of Airtel Africa Plc, Airtel Networks Kenya Limited and Telkom Kenya Limited, in collaboration with other parties, had entered into an agreement on February 2019 to combine their businesses in Kenya, so as to create an integrated telecommunications platform with mobile, enterprise and wholesale divisions.

Airtel Africa Plc in its statement said, ‘’Airtel Networks Kenya Limited (Airtel Kenya), an Airtel Africa Plc subsidiary, and Telkom Kenya Limited (Telkom) amongst other parties, had entered into an agreement dated 8th February, 2019 to combine their businesses in Kenya, so as to create an integrated telecommunications platform with mobile, enterprise, and wholesale divisions.’’

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‘’The completion of the business combination was subject to the satisfaction of various conditions precedent, including regulatory approvals.

“Despite Airtel Africa Plc and Telkom respective endeavours to reach a successful closure, the transaction has gone through a very lengthy process which has led the parties to reconsider their stance. Accordingly, Airtel Africa Plc and Telkom have decided to no longer pursue completion of the Transaction.’’

In his own reaction, the Chief Executive Officer of Airtel Africa Plc, Raghunath Mandava, said that Kenya was a large and growing market and stressed on the commitment of Airtel Africa to build a growing profitable business.

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He disclosed that the telecoms giant currently serves over 14 million Kenyan customers, a number that is growing every month. He pointed out that the revenue numbers were up double-digit in constant currency in Kenya in the last quarter.

The Airtel boss reiterated the strategy of the firm is to focus on winning more customers, invest in a best in class voice and data network and progressively expand their mobile money business, will continue to build on these results in order to deliver against the opportunities the Kenyan market has to offer.

Airtel Africa is a leading provider of telecommunications and mobile money services with a presence in 14 countries in Africa primarily in East Africa and Central and West Africa.

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Austin Avuru retires as CEO of Seplat petroleum, to receive huge benefits

According to the notice, Avuru will be considered a “good leaver” on his retirement.

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Austin Avuru retires as CEO of Seplat petroleum, to receive huge benefits, Seplat to acquire more oil & gas assets after Eland's acquisition

Co-founder and Chief Executive Officer of Seplat Petroleum Development Company Plc, Austin Avuru has retired as CEO of the company, but will remain on the board as a Non-Executive Director.

According to a notice sent to the Nigerian Stock Exchange and signed by the company secretary Mrs Edith Onwuchekwa, the resignation took effect on July 31, 2020.

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What this means

According to the notice, Avuru will be considered a “good leaver” on his retirement and receive his remuneration and benefits as such.

The Remuneration Committee has confirmed that Avuru will receive “a lump sum payment in lieu of notice equal to his salary, benefits, and pension allowance until November 18, 2020” as well as other security and travel benefits.

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He would also receive a loss of office payment equal to 12 months’ salary, as compensation and in accordance with the Nigerian market practice.

READ ALSO: Seplat’s Austin Avuru no longer has direct shares in company 

In line with the provisions of the Directors’ Remuneration Policy approved by shareholders of the Company at its 2018 AGM, he will also receive a pro-rata bonus (in cash) to reflect his time as CEO during the financial year, and same “will be provided in the Company’s Directors Remuneration Report for 2020 and subsequent years”.

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Seplat will also vest awards made in form of deferred shares in 2019 and 2020 at the normal vesting dates, and subject to the achievement of the relevant performance conditions, and Avuru will be subject to the post-employment shareholding requirement for two years.

The company management and board appreciated Avuru for his ‘excellent leadership’ in growing the company to become a notable player in the Nigerian and wider African hydrocarbon industry.

READ: Okomu Oil Palm ‘s profit declines by 43.22% as at Q3 2019  

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Backstory

On November 18 2019, Seplat Petroleum Development Company Plc announced that Mr Austin Avuru will be retiring as CEO at the end of July 2020.

This is in line with Avuru’s earlier plans to retire sometime around his 62nd birthday.

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