DEBT CRISIS: Arik Air and Aero Contractors on Brink of Collapse, Says AMCON

The Asset Management Corporation of Nigeria (AMCON) has announced that Arik Air and Aero Contractors may be merged due to huge debts and converted into a national airline.

AMCON Managing Director and Chief Executive Officer, Mr. Gbenga Alade, disclosed this information at a meeting with media executives in Lagos on Monday.

He explained that both airlines have huge debts which they may not be able to repay.

Alade said the idea of merging Arik and Aero Contractors to form a national airline was proposed to a former Minister of Aviation but the proposal was not accepted.

He said, “The former management of AMCON presented the idea of converting Arik and Aero to a national carrier. But the former aviation minister did not buy the idea. We will present it again because that is the best option.”

He further explained that the former management of AMCON had set up special purpose vehicles (SPVs) to facilitate the conversion of these airlines into national airlines, but they were sold.

However, he believes that another special purpose vehicle can be set up for this purpose.

“Unfortunately, the special purpose vehicle that was created by the former management of AMCON for the conversion of Arik and Aero to a national carrier had been sold. But we can create another SPV for this,” he said.

Alade expressed concern over the current situation of Arik and Aero Contractors, stating that the situation is causing him a lot of stress.

“Believe me, it is a very difficult problem to resolve, and it is giving me sleepless nights, particularly Arik. Arik is owing so much that they cannot pay,” he explained.

He also discussed possible solutions, saying that he is negotiating with Arik’s main international creditors, including Afreximbank, to find a solution.

Arik owes Afreximbank about $52 million, but after negotiations, the airline was only willing to pay $8.5 million of that.

“However, where will that $8.5m come from? Where? AMCON doesn’t have money of its own to put there,” he said.

Alade explained that during negotiations it was suggested that some of Arik’s engines be removed to eventually repay the debt.

But he opposed the idea as it would weaken the airline. “And the truth is that, if they took those engines away, Arik is finished.

But we said ‘no, we cannot allow you to take it away. Let AMCON give you a kind of bank guarantee,” he explained.

Alade concluded by saying that AMCON is working hard to keep Arik operational, with three currently flying and a target to have seven flying, hopefully, by February next year.

”We will stretch it so that three planes are flying now and by the Lord’s grace, by February next year, we want to make seven planes fly for Arik,” he added.

As a reminder, the Federal Government lifted the suspension of Arik Air on August 8, one week after the airline’s planes were grounded following a dispute with Atlas Petroleum.The Asset Management Corporation of Nigeria (AMCON) has announced that Arik Air and