The Asset Management Company of Nigeria (AMCON) appears to have moved one step closer in its bid to find a buyer for Arik Air, as Ethiopian Air has submitted its bid. Esayas WoldeMariam, the airline’s Managing Director of International Services stated this in an interview with CNN.
Who benefits from the deal?
The Asset Management Company of Nigeria (AMCON) will be glad to let go of the airline which has been a huge drain on its books. AMCON is under pressure to sell of assets on its books ahead of its winding down in 2020. The corporation took over the operations of the airline on the 9th of February this year and has spent billions of Naira to keep the airline afloat.
Ethiopian Airline, will gain a foothold in the Nigerian market if its bid is accepted. Arik Air is one of the largest airlines in the country, carrying almost 50% of the country’s passengers.
A few hurdles still remain
Similar asset sales by government in the recent past have failed. In September 2004, the Nigerian Government and Virgin Atlantic signed an agreement to launch a National carrier, which was christened Virgin Nigeria. As part of the terms of agreement, Virgin was granted the right to use the Muritala Mohammed international Airport (MMIA) as its base. In 2008, Virgin Atlantic decided to sell its stake in the airline following disagreements with a new administration. Nigerian businessman Jimoh Ibrahim bought Virgin’s stake in the airline in 2010, but shut down the airline in 2012 following a dispute with workers.
Arik Air also owes over N300 billion to domestic and foreign creditors including regulatory agencies in Nigeria. It is yet unknown if government will defray the debts, or the extent creditors will be willing take a haircut on loans to the airline.
Ethiopian Airways was founded on the 21st of December 1945 and is wholly owned by the Ethiopian Government. The airline flies several routes within and outside Africa including Washington and Paris.