Arik Air’s toxic debts now N300b, still counting

*L-R: The Media Consultant To AMCON, Mr. Simon Tumba, the Receiver Manager, Mr. Oluseye Opasanya, and the CEO, Capt. Roy Ukpebo Ilegbodu at a media briefing at the airline’s headquarters, Lagos.

N10b required to fix the rot—AMCON-Appointed CEO

Arik Air’s debt profile has risen to over N300 billion with 10 out of the airline’s 28 aircraft now providing services.

It was gathered that the debts, to a reliable source, are those owed to some banks, excluding fuel suppliers, lessors and maintenance companies.

A source close to the new management who craved anonymity stated that barely 72 hours after the Asset Management Corporation of Nigeria (AMCON) took over the management of the airline, the carrier “has got assistance to be able it offer smooth flight services as well as realign its services in the face of its dwindling fleet, from 28 aircraft down to 10.”

“Following its intervention Thursday, it has been gathered that virtually all of Arik’s trade creditors are being owed, staff salaries have not been paid for between four and six months, and of the 28 aircraft in Arik’s fleet, only 10 are in operation.

“It appears that unlike previously recorded, Arik has debts in excess of N300 billion, especially with some banks, excluding fuel suppliers, lessors and maintenance companies,” said the source.

With the federal government’s intervention, the source added: “Operations will go on uninterrupted; the insurance cover for the aircraft which would have expired on Sunday, February 12 (today) has been sorted out. Trade creditors and fuel marketers have been assured that all indebtedness will be looked into; they have offered to support the new management to ensure smooth operations.

“Previously the fuel suppliers had suspended credit facilities, but the new management is working to ensure steady fuel supply.”

It was further learnt that the new management was taking steps to stabilise the airline’s operations by scaling down flight services based on the number of serviceable aircraft at its disposal until more aircraft return from C-check and maintenance yards abroad.

The source added that a new schedule will be announced in the next few days to accommodate its existing fleet of 10 aircraft.

“It is obvious that without government’s intervention Arik would have virtually stopped operation by Monday of next week. We need public support to understand the enormity of the challenges here, while we stabilise operations over the next few days, as we offer safe, secure and timely services to customers,” said the source.

Meanwhile, AMCON has described the airline as an empty shell saying over N10 billion would be required to fix the carrier before it resumes full and uninterrupted flights to its regular routes within and outside Nigeria

“The situation is so bad that only nine aircraft out of the 30 in the fleet 21 of them have either been grounded or gone for C-check in Europe.

“As if these problems are not enough, the airline does not have money to procure aviation fuel for the nine operational aircraft because no dealer wants to sale aviation fuel to Arik if it is not on cash-and-carry basis. This also calls for public understanding because flight schedules may be realigned based on the nine aircraft that are available, technically sound and ready for flight operation,” said AMCON in a statement.

“It was also discovered that Arik also owe its technical partners and also in perpetual default in its lease payments and insurance premium, leading to regular and embarrassing squabbles with different business partners, which accounts for why 21 aircraft are off the fleet for different reasons.

“All these problems in addition to huge staff salaries, which have remained unpaid for 11 months; vendors that supply different items to Arik Air that are also owed meant that Nigerians may have to tarry-a-while to allow the new management clean up the huge mess at the airline before Arik would finally resume uninterrupted flight,” it added.

However, the carrier’s new chief executive officer Capt. Roy Ukpebo Ilegbodu, has reassured that the challenges are not insurmountable.

He said the issue would be gradually resolved to enable the airline which carries about 55 per cent of the load in the country recover the 21 aircraft.

“Once all the aircraft are back, Arik Air will within the shortest possible time regain its pride of place as a leader among the comity of airlines in Nigeria.

“The intervention at Arik on February 9, 2017 clearly underscores government’s decision to instill sanity in the nation’s aviation sector; he move has also prevented a major disaster that would have befallen the airline,” he added.

It would be recalled that AMCON took over the management of Arik Air that had been struggling with debt overhang.

It appointed Capt. Roy Ukpebo Ilegbodu as the managing director under the receivership of Mr. Seyi Opasanya (SAN).

It said the airline “has been going through difficult times that are attributable to its bad corporate governance, erratic operational challenges, inability to pay staff salaries and heavy debt burden among other issues, which led to the call for authorities in the country to intervene before Arik goes under like many before it.”







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