The Nigerian government has in the past years, recorded failure in successfully floating a national carrier. In view of this, stakeholders in the Nigerian aviation industry have advised the Federal Government on what to do with Aero Contractors and Arik Air.
The stakeholders wants the government to merge the two airlines to establish a national carrier. On why the merger should take place, Group Captain John Ojikutu (rtd) said that it is almost impossible for Asset Management Corporation of Nigeria (AMCON) to get investors to buy the Arik Air with its N300 billion debts.
Ojikutu maintained that for AMCON to offset the N300 billion debts from the airline, it should be making a net profit of N10 billion annually for 30 years, stressing that this would be difficult for the corporation to achieve. He added that AMCON did not have the resources to run an airline profitably.
Lookman Animashaun, an industry expert and former Director of Engineering at Medview Airline, suggested that the best option for AMCON and the Federal Government is to establish a national carrier with the airline.
Just like Ojikutu, Animashaun said because of the airline’s debt burden, no investor would be interested in the airline, and if AMCON decided to manage the carrier, it would take it about 30 years to recover the money it invested in the airline, considering the airline’s turnover.
Animashaun maintained that it would be a waste of resources and spending a longer time trying to establish a new national carrier when Arik Air and Aero Contractors, which were under the Federal Government management could be used to establish a national carrier.
He explained that Arik Air had structure and it had a fleet, which government could maintain and put them back in the air and then grow a national airline from there.
“Arik Air has structure, although AMCON claims it does not have. So my thinking is that there is no need starting a new national carrier; what government should do is to earmark funds and carry out maintenance of all the aircraft in the fleet and start the new national carrier.
“This is the only window AMCON has because it cannot let go of the money it sank in the airline and managing the airline to get back the money through its revenues will take about 30 years because of the airlines profit margin. This is better and easier way out,” Animashaun added.
Recall that in May 2017, a proposal was already in place by the Federal Government to merge Arik and Aero in order to create the new national carrier.
Prior to this…
AMCON took over Arik Air in February 2017 and has estimated the airline’s debt at over N375 billion comprising domestic and foreign investors. Since then, the bad bank has injected over N1.5 billion into the airline. There have been several allegations of AMCON cannibalising Arik aircraft parts to put in Aero Contractors.
In a similar circumstance, AMCON in February 2016, took over Aero Contractors. The airline which prides itself as one of the oldest in the country was founded by Schreiner Airways BV of the Netherlands in 1960. The Ibru family later bought a stake in the company and became the full owners in 2010. The airline’s indebtedness to AMCON and other bodies is estimated at over N20 billion.
