The Receiver Manager, Arik Air, Oluseye Opasanya has refuted a report that the airline company is struggling to find investors for Arik Air two years after the Asset Management Corporation of Nigeria (AMCON) took over and placed the airline operator up for sale.
Opasanya in a statement queried the ThisDay report, stressing the publication lacked fact and interspersed with half-truth which are meant to downplay the effort of AMCON to attract investors since its intervention in Arik Air.
ThisDay had reported that no investor has indicated interest to acquire Arik Air, backing the claims with anonymous sources. The report also noted that substantial revenue generated by the airline was allegedly being spent on foreign trips of the management personnel, emoluments, and other allowance.
Opasanya stated the report was falsely written and misleading. In the statement, the Receiver Manager disclosed that the facts are readily available to defend the improvement of Arik Air under AMCON, arguing the airline company has performed better than the pre-AMCON period.
Arik Air performance in pre-AMCON period
Opasanya said the decision by AMCON to appoint a Receiver Manager (RM) and new management team on February 9, 2017, prevented Arik Air from imminent collapse, as the airline had its assets abandoned around the world, with the maintenance hangar littered with unserviceable aircraft and related equipment, while Arik Air was struggling with only eight serviceable aircraft.
“Even some of the serviceable aircraft were due for various checks. Staff were owed between four to six months’ salary and staff morale was at the lowest ebb. Fleet insurance was due and the airline basically struggled to pay the premium. Vendors were owed colossal amount of trade debts to the extent that no oil marketer was willing to advance trade credit to the airline.
“The former management found it extremely difficult to pay for fuel and as a result flight cancellation was rife, on-time performance (OTP), which is a measure of an airline’s ability to meet scheduled flight time plummeted leading to significant customer attrition and loss of confidence. Furthermore, regulatory agencies were owed incredulous amounts of money and by way of example, passenger service charges impressed with trust collected on behalf of the government had not been remitted for several years.
“So also were huge sums of money deducted from workers’ salaries over many years which were not remitted to Pension companies. The flying public was equally owed several millions of Naira and foreign currencies on account of unflown tickets and cancelled flights.”
Arik Air under AMCON
According to the statement, business started picking up in Arik Air after the appointment of the Receiver Manager and new management team. Before AMCON’s intervention, the On-time Performance (OTP) had fallen to 19%, but after the takeover, the OTP climbed up steadily and currently averages 63.5%, while cancellations, which were as high as 40% as at January 2017, has been significantly reduced to less than 4%. Average load factor is currently over 73% whilst aircraft utilisation has also increased by about 50%.
Search for investors
Due to the resurgence of Arik Air under AMCON, local and foreign investors are showing interest in the airline operator. Opasanya added that past attempts to resolve the debt issue with legacy shareholders have been frustrated by their insincerity exemplified by the presentation of fake and bogus investment proposals (false financial backing), confirming the lack of corporate governance and diligence in their approach to business.