The Asset Management Corporation of Nigeria (AMCON) has refused to pay to the aviation agencies N9.6 billion and $2.3 million (totalling N10.5 billion), being five per cent ticket and cargo sales charge owed by Arik Air, when AMCON took over the airline on February 9, 2017.
AMCON described the debts as unsecured and blamed the aviation agencies for allowing the debts to pile up without insisting on collecting them or grounding the operations of the airline.
AMCON stated this during a recent closed-door meeting between the House Committee on Aviation and AMCON’s representatives to ensure that the corporation liquidated debts owed by Arik before establishing the new airline, NG Eagle.
Brand spur learnt AMCON claimed during the meeting that it was presently the owner of Arik Air, having bought over debts owed by the airline, which it put at over N300 billion. It also insisted that it would only pay post receivership debts.
Receiver Manager of Arik Air, Omokide Kamilu Alaba, was said to have explained at the meeting that AMCON decided to establish another airline, NG Eagle, as a non-disruptive exit plan. Alaba disclosed that the airline would be owned 100 per cent by AMCON and it would be a publicly owned carrier with the Ministry of Finance and Central Bank of Nigeria (CBN) as majority shareholders.
He said Arik Air would not be under receivership forever, so the exit plan was to establish another airline, as litigations that might follow Arik Air might not allow it to be operated successfully.
To avoid international litigation and possible seizure of the aircraft under the new airline, Alaba disclosed that the airline would only operate domestic services; so it would not add regional or international routes to its operations.
The Receiver Manager also explained during the meeting that when AMCON took over the airline, he looked at its accounts and recommended that Arik Air should be liquidated. His reason for the recommendation was because of the huge debts it owed, which he said was higher than its asset ratio by about 50 per cent.
AMCON put the assets of the company to over N150 billion, which was against $3.7 billion that was the audited assets of the company by late 2016, under the old management, few months before AMCON took over the company on February 9, 2017.
He said government considered the fact that if the airline was liquidated at that time, it would drastically reduce fleet capacity for scheduled flight operations in Nigeria, so government decided to inject funds into the airline in order to sustain it.
A committee was formed at the meeting to restructure the debts owed by Arik Air that would be paid by AMCON and the committee was given one week to complete the assignment.
During the meeting AMCON representatives insisted that rather than penalising the corporation for the old debts owed by Arik Air, the aviation agencies should be held responsible. It added that it was a failure of the management of the agencies that the debts were allowed to pile up to the stated amounts.
Justifying the establishment of a new airline from the ashes of Arik Air, a former Director General, who was at the meeting on behalf of Arik Air, told the House Committee on Aviation that there was nothing wrong in establishing a new airline from Arik Air. He compared the plan to that of Bellview Airline, which changed its name to First Nation Airways, saying that Bellview changed its name when it became a liability after a tragic accident, but the establishment NG Eagle was to recover the funds expended by AMCON on Arik Air.
However, Brand spur was informed that that before AMCON took over Arik Air in 2017, Deloitte of London had audited Arik Air and put its assets at $3.7 billion.
AMCON said it had taken over the debts of Arik Air, but since 2017, it had failed to service debts the airline owed to Bombardier, put at $47 million. This was balance payment for the acquisition of two CRJ 1000 aircraft and four Dash 8, Q400 aircraft.
Brand spur gathered that currently Arik Air operated largely leased aircraft and when NG Eagle is established, the lessors of the aircraft would withdraw them and Arik Air would seize to exist.