As Asset Management Corporation of Nigeria gets set to wind down, Chinedu Eze looks at the activities of the agency in the aviation industry, especially its contributions in Aero Contractors and Arik Air.
Since the President Ahmed Bola Tinubu took over office, there has been indications that the Asset Management Corporation of Nigeria (AMCON) would wind down its activities and this was recently confirmed by the renowned lawyer, Femi Falana.
Aviation industry stakeholders are asking the question, What happens to Aero Contractors, which the agency has major stake of 60 per cent and Arik Air, which is currently lame after it was taken over by AMCON in 2017?
The two major airlines seem to be a shadow of what they used to be in the past when they robustly dominated Nigeria’s air travel market. Aero, which came to be over 62 years ago, still enjoys the reputation of inimitable goodwill and enviable safety record. But today, with barely three aircraft to its name, the airline is in a quagmire and in dire need of capitalization. Arik Air, which was serially and literally raped by AMCON management is waiting to be salvaged hopefully with the total withdrawal of AMCON.
Aero Contractors Resuscitation
Many industry experts insist that Aero Contractors would have become extinct without the intervention of AMCON. The airline was almost swept into bankruptcy by bad management, when it acquired old aircraft at exorbitant prices. The airline paid hugely for the aged Boeing 737 classics at the cost that dug a big hole in the finances of the airline and laid siege for its extinction. It was at that stage that AMCON stepped in to salvage it.
So, by the time Asset Management Corporation of Nigeria took over the management of Aero Contractors iin February 2016, the hitherto foremost airline was at its nadir. There was no money to run the airline; the aircraft in its fleet were largely moribund and in dire need for maintenance. Besides, the labour unions were restive because it looked inevitable that workers in the company would lose their jobs.
This was sequel to the aforementioned financial hiccups suffered by the airline, when it became insolvent, which prompted AMCON to take it over, absorbed its debts and faced the mandate to rejuvenate it.
THISDAY gathered that even after AMCON took over, things didn’t start looking up immediately. Spokesman of AMCON, Mr. Jude Nwauzor recalled then that during the period, AMCON was gauging the best way to manage the airline out of disaster.
With new management under Captain Ado Sanusi Aero was able to rebuild its Maintenance, Repair and Overhaul (MRO) facility in 2018 and it has upgraded it to the level that it could maintain Boeing B737 aircraft to C-check level, the first time in Nigeria.
Capacity
The Managing Director and CEO of Aero Contractors, Captain Ado Sanusi, told THISDAY in exclusive telephone interview on Wednesday that currently the airline has one helicopter still operating. It also has one Bombardier Dash 8, Q300 and one Boeing 737 Classic, which it leased from Cross River state, Cally Air. Sanusi also disclosed that the airline is conducting a check (maintenance) on its own Boeing 737 Classic, which would be completed in few weeks.
“So, by the end of September we shall have four aircraft, which will include one helicopter, one Dash 8 and two Boeing 737 Classics”, he said.
Sanusi also disclosed that the airline’s maintenance arm is still on-going and Aero has been able to pay the workers’ salaries, which was kept up to date, since Sanusi took charge of the airline.
Although AMCON still has 60 per cent of the shares of the airline, but it is not getting any funding from the government agency and the stakes still subsists, but Sanusi expressed the belief that before AMCON would wound down, it would divest its shares to any interested party that wished to invest in the airline.
“We are not getting funding from AMCON, but the airline is still under AMCON. I am aware that AMCON is in the process of divesting its shares from the airline and I know it will do that before it winds down. The agency cannot leave the shares it has till it winds down,” he said.
Last year the airline existence was threatened under a previous management before Sanusi was reappointed to manage it.
Aero Contractors is in dire need of funding. It is the only airline that has maintenance facility, which if funded to acquire modern aircraft has the resilience and technical ability to survive for a long time.
Sanusi told THISDAY last year, “The airline needs fleet renewal without which it cannot survive. External factors include high cost of aviation fuel, scarcity and high cost of forex, low passenger traffic, which was extraordinarily very low. When I left the airline it had a good chance of survival, even coming out of receivership. But it needed strict financial management,” he had said.
Arik Air
But AMCON’s incursion into Arik Air is a different narrative. Many observers in the aviation industry have expressed the opinion severally that AMCON taking over the management of Arik Air was ill-advised because it did not have the competences and technical know-how to manage the airline. Today, the airline is almost moribund after apparent mismanagement.
Mismanagement of Arik Air
Recently the renowned lawyer and activist, Falana observed that AMCON ran Arik Air down, prompting him to petition EFCC, which carried out comprehensive investigation into how the airline was being run.
He said that in addition to stripping the airline of its assets worth billions of Naira, the management under receivership still fraudulently incurred debts of about N120 billion.
“There is a body they call AMCON. This agency will take over an organization, run it down and employees are sacked and once it is under AMCON’s management nobody wants to do business with that company. So, what kind of economy is this? It must be a kalo-kalo economic system. We have problems now flying in the country. The aviation industry is in crisis. AMCON took over Arik Air six years ago and Arik at that time had 17 aircraft . Some banks owed by the airline had an arrangement with Arik. Passengers would pay for their tickets and the banks would deduct their own share from the money and leave the rest to the airline for its operations. But AMCON took over, appointed a Senior Advocate of Nigeria (SAN) who had no aviation experience except travelling by air and made him Arik Air’s Receiver Manager.
“The man knew he was running the place aground and decided to withdraw as the receiver manager of the airline. Then AMCON appointed another person without court order and the man took over. They decided to take loans. They decided to destroy the company. Two aircraft were cannibalized; one valued at $37 million and another one valued at $42 million. They were cannibalized and sold by an agency owned by a legitimate government. Today, we now discovered that Arik Air that had 17 aircraft now has only two. We wrote petition to EFCC. In addition to this, the people who took over Arik have committed fraud to the tune of N120 billion. EFCC has confirmed this. What did the government do? The new government said, what is our business as government with managing debts? The banks are rich enough to sue those who owe them. The President has decided it is going to abolish AMCON,” Falana said in a recent interview with Channels Television.
Uncertainty
The future of Arik Air, which was once Nigeria’s biggest airline, is uncertain. Although the founder and Director of the airline, Sir Johnson Arumemi Ikhide along with another Director, Mrs. Mary Ikhide sued AMCON over the destruction of the company but it is clear that government must have to intervene to enable Arik Air have a future. Many in the aviation industry and other sectors of the economy have suggested variously that what AMCON did with Arik Air and other companies they took over was a disincentive to investment. They could not understand how a government agency could take over companies and instead of recuperating them they would be made moribund.
However, on the issue of Arik Air, AMCON had always insisted that if it did not step in to take over the management of the airline when it did, it would have gone under.
And recently the Asset Management Corporation of Nigeria said it recovered N1.6tn from bad debtors in 10 years of its existence.
The Managing Director, AMCON, Lawan Kuru, said, “Out of total of N4.66tn, we have so far recovered about N1.6tn in the more than 10 years of our existence. We still have a long way to go! About 350 obligors account for N3.96tn, which is above 84 per cent of total outstanding amount.
“Our debt is in the balance sheet of the Central Bank of Nigeria, and therefore a threat to the economy. After recovery and disposal, funds are paid directly into our CBN account. Recovery and disposal of assets have so far contributed about N1.6tn towards settling our obligation.”
However, THISDAY learnt that before the wind down of the agency, there would be a change of management and the new person, whom government is still looking for, would be known as sole administrator. His objective would be to wind down AMCON and see whether some of the companies literally castrated by the agency would be revived.
“They are looking for somebody that will come and replace Kuru. The new person will be known as Sole Administrator and his mandate will be to wind down the agency,” informed source told THISDAY.
But former senior official of Arik Air told THISDAY, “Arik Air did not have any case of non-performing loans, AMCON scheme was simply a grabbing plot executed to erode the shareholders capital, destroy the airline and give birth to the so called NG Eagle . It was without doubt all thought out from day one , but like so many things not based on truth, equity and justice , it will collapse. They cleverly ran down over 19 New Generation aircraft , closed down all intercontinental, regional routes, and some domestic routes, threw out over $100 million worth of international airport slots in London Heathrow and J. F Kennedy Airport, New York in US. And yet, AMCON Receiver Manager cannot render accounts. With what happened to Arik Air, AMCON has exposed Nigeria to the rest of the world with regards to respecting international treaties and commercial contracts.”
