Former Arik management denies owing $78m to IATA

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The former management of Arik Air has debunked claims by the Asset Management Corporation of Nigeria (AMCON) that it owed $78 million to the International Air Transport Association (IATA).

An old management staff who spoke on condition of anonymity described the claim as “erroneous” saying IATA has the mandate to collect the revenues of the Federal Airports Authority of Nigeria (FAAN), Nigerian Civil Aviation Authority (NCAA) and Nigerian Airspace Management Agency (NAMA).

He said as Arik paid its charges to the three agencies, the invoices were duplicated in IATA.

“So the alleged $78 million debt was a misunderstanding. We have our receipts and banking tellers to back these payments, which we made directly to these agencies instead of through IATA,” he said.

Meanwhile, as the airline’s revenue dwindles, there are imminent signs that Arik will lay off its workers.

It was also gathered that the airline would have to sack some of the expatriate pilots “because even now we are already incurring heavy losses.”

It was also learnt that some of the expatriate and technical staff had started leaving the company on their own because of the reduction of the airline’s operations.

The looming retrenchment is occasioned by a drastic reduction of flights from 120 to average of 18 flights daily as well as decrease in the number of operating aircraft.

The airline has about 2000 workforce in its Nigerian operation with about N1 billion monthly wage bill.

The source said the carrier projected a monthly revenue of N1.5 billion, which, according to him is not enough to meet operating costs, offset aircraft insurance bills or pay its creditors.

It was learnt that the airline has been hit by paucity of funds because of difficulty to generate enough revenue to service the aircraft already on aircraft on ground, source for fuel and pay the workers.

To service the five aircraft, it was gathered that the airline would need about $1.5 million which is likely to be sourced from the black market.

“To fix the aircraft we need money. We may have made a mistake by stopping the Lagos-London flights because it is now difficult to get spares from the manufacturers, which we used to fly in from London and we need the spares on regular basis.

“The new management has to cut off regional and international flights because it is difficult to source forex to service those routes as the value of the naira continues to threaten Nigerian airlines,” said a source.

AMCON is expected to inject inject about N15 billion into the airline as start-up fund after the initial funding of about N4 billion, but the hope of getting more fund from the government agency had continued to wane as the new management is said to be grappling with the challenge of managing the company.

It was also gathered that Capt. Roy Ilegbodu who leads the new management team had said he would not compromise the safety standard of the airline.

He said instead of buying spares from secondary sources, he would rather rest the aircraft.

It was also learnt that he said he would not want to record any major incident or accident while the airline is under his management.

Reacting to the impending sack in the airline, the media consultant to AMCON, Mr. Simon Tumba said the airline had no plan to sack the workers.

He said instead of laying off the workers, the new management appointed by AMCON was planning to service five more aircraft and put them back to use.

“It’s absolutely not true that the airline is laying off staff. The mandate of the current management is to stabilise the airline and normalise operations. There has never been any discussion of downsizing. KPMG is already doing an audit of assets liabilities and that may include staff headcount since the previous management did not leave any record of 2015 and 2016 finances and general affairs of the company,” he said.

He added that the federal government was already assisting the airline to return to profitability.

“The government is already assisting financially to ensure the airline operates smoothly, but I cannot confirm any figures at the moment. I am aware that the amount so far is certainly far from the N15 billion you mentioned,” he said.

On the notion that expatriates and technical personnel were leaving, Tumba said before AMCON took over the management, expatriates were already leaving because they were owed salary for many months.

 

 

 

 

 

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