Mixed reactions trail AMCON’s takeover of Arik Air
PHOTO: Arik Air
Mixed reactions have continued to trail the takeover of Arik Air by the Asset Management Company of Nigeria (AMCON).
The News Agency of Nigeria (NAN) reports that AMCON had on Thursday taken over Arik Air following the airline’s huge indebtedness to the company and other creditors, both local and foreign.
The asset company directed that the airline would now be managed by Capt. Roy Ilegbodu, a veteran aviation expert, under the receivership of Mr Oluseye Opasanya (SAN).
Mr Olayinka Abioye, General Secretary, National Union of Air Transport Employees (NUATE), told NAN on Friday that the aviation unions were being cautious in their reaction to AMCON’s take over of Arik Air which is Nigeria’s largest carrier.
“Our position is that AMCON, which is an agency of government, has not been able to manage some of these firms the way we would have expected.
“We are not particularly pleased with the way AMCON has been managing Aero Contractors, and now it is coming to take over Arik.
“We just need to watch what is going to happen thereafter too and give them the benefit of doubt for now, ” Abioye said.
He said that the welfare of Arik Air’s employees was the number one priority of the unions, stressing that the leadership would soon meet on how to resume discussion with the new management
Also reacting, Mr Gbenga Olowo, President, Aviation Round Table (ART), said the harsh condition of doing business in Nigeria was largely responsible for Arik Air’s woes.
” We all saw it coming to Arik, and maybe others, more than a year ago.
“ART Quarter 1 breakfast meeting in 2016 appraised the very poor situation of Nigerian airlines and rose with an unambiguous communique on the way forward. This is still available on artng.org.
“Treating the Arik case in isolation will be to trivialise the magnitude of the problem.
” Going back to almost 40 years; the government airline – Nigeria Airways – failed; pioneer private airlines – Okada , Kabo, etc failed; third generation ADC, Bellview, Chachangi, Sosoliso etc failed; fourth generation Virgin Nigeria and Air Nigeria failed.
“Believe me, given same Nigerian operating environment, the national carrier yet to be born will fail,” Olowo said.
According to him, the failure of the airlines, essentially, is a Nigerian business environmental factor.
He said business and government were permanently at variance, while cost was permanently higher than income.
” Tax overburden and infrastructural deficit erodes revenue steadily. Gazetted policies that will enhance performance are not implemented. Credit is not in Nigeria business dictionary.
” Yet, Aviation is prone to the most minute situation in the economy, ranging from weather to politics and reckless holidays, ” Olowo added.
On his part, Capt. Dele Ore, a former President of the ART, said that the take over of Arik Air was very gloomy for the industry.
Ore said :”From experience, if care is not taken, that airline will be crippled for the next two years.
“There will be too many interests and distractions. The boardroom politics, shareholders and ownership tussle will bog the airline down.
“So, my own fear is for our children, friends and colleagues who may be thrown out of jobs if things are not done properly. ”
He said the owner and management of Arik Air brought the situation upon themselves by not entrenching good corporate governance on the airline and its operations.
According to him, the airline also had many expatriates on its payroll which was not really necessary.
“The debt profile is too high because when you bring foreigners here, you have to give them the best treatment and condition of service.
“What you spend on one expatriate can cater for three Nigerians who can do the same job,” Ore said.
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5 Comments
Very good and timely development, enough of inefficiency and carelessness. why wont they wallow in dept when they cant manage the opportunity that they had
All Nigerian airlines are doing it wrong. The new ‘darling of month’: Air Peace…is doing it wrong. The business plans and concepts are wrong; the operational plans are wrong; the entire management team is wrong; the airplanes are the wrong size for the routes being served – and the daily pilferage of cash by ministers and managers will kill ANY airline in Nigeria.
AMCON will NOT be able to save Arik Air (as it is configured today) and it SHOULD NOT SAVE IT. There is no plan and no conceivable way forward to eliminate the huge monetary losses. The irony here is that there two men who have the expertise, plan, contacts and access to new money – but they are being ignored. Oh, well…
The stakeholder are completely accurate in the fact that Nigeria aviation business environment is not good. And that is due to the government lack of ability to grow the sector. no airline would really survive when it has to dance to the turn of fuel importers, which is never stable. no airline would grow or survive when it has to spend millions of dollars each year to maintain its plane outside the country. no airline would survive when our airport infrastructure is so bad, and we lack the ability to make parts for our planes. The environment for our airlines is so bad and it would continue to be bad until the government begins to invest in the sector. we can start by dealing with the fuel situation, localizing the maintenance of the planes, by improving our airport, by supporting our airlines and fighting for more route for them. There is no reason BA or any foreign airline should be bring in passenger from outside Nigeria into the country and also taking them out. if they bring in passenger, Nigeria airline should have that ability or deal to take passenger out of Nigeria.
The ‘800 Pound Gorilla’ in the room regarding the deplorable financial and operational mess – the entire Nigerian commercial aviation industry is struggling with – is a double edged sword; there would NOT be one single commercial aircraft flying anywhere, in or out of Nigeria, without TAXPAYER naira being squandered on repeated failed attempts to ‘create’ an airline – and THEN more squandered naira on trying to keep them alive! Today – 2017 – there is no viable commercial aviation industry in Nigeria!
The NUMBER ONE – WORST decision to be made is to put former pilots (Captains) in charge of running the business of the airline. There are NO airline or aviation experts in Nigeria – and the least competent people being included – are airline pilots!
Well trained, competent, pilots – belong on the flight deck – not in the boardroom! There is NO place for government employees, bureaucrats nor politicians in the management team of airlines. lenhobbs@att.net (USA)
My business group, in the US, is offering the Government of Nigeria, AMCON and Arik Air – a deal:
We are offering to buy the entire airline operation – for cash – for the current market value. We will assume none of the incurred and outstanding debt. We will re-capitalize the company and put it back into operation. We will own and operate the ‘new’ company with our own money with no subsidies from any entity – for a period of five years. At the five year anniversary – we will offer to sell the entire airline company ‘back’ to Nigerian investors – at the calculated market value at that time.
This is a perishable offer: NOVAN Aviation Group, LLC – lenhobbs@att.net
We will review and take appropriate action.