FG May Convert Arik, Aero Contractors To National Carriers

The Asset Management Corporation of Nigeria (AMCON) has announced that it is considering merging two prominent Nigerian airlines, Arik Air and Aero Contractors, and converting them into a national carrier.

This disclosure was made by the Managing Director and Chief Executive Officer of AMCON, Gbenga Alade, during an interactive session with media executives in Lagos on Monday.

According to Alade, both airlines are facing significant financial challenges and are heavily indebted, making it unlikely that they will be able to repay their outstanding loans.

This situation has prompted AMCON to explore the option of merging the two carriers.

Alade revealed that AMCON had previously presented the idea of converting Arik and Aero Contractors into a national carrier to the former Minister of Aviation, but the proposal was rejected at the time.

The potential merger and conversion into a national carrier is seen as part of broader efforts to address the financial struggles of the two airlines and ensure the sustainability of Nigeria’s aviation industry.

Alade 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.

“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.”

Recall that the former Minister of Aviation, Hadi Sirika, launched the Nigeria Air three days before the end of former President Muhammadu Buhari’s administration.

The development had elicited concerns among stakeholders over the ownership arrangement which gave Ethiopian Airlines a 49 per cent equity stake in the company.

The Federal Government had a 5 per cent equity, while a consortium of three Nigerian investors had 46 per cent.

Reacting to the deal in June 2023, the House of Representatives asked the Federal Government to suspend the operations of Nigeria Air, describing it as a fraud.

In August 2023, the incumbent minister, Festus Keyamo announced that the national carrier project was suspended till further notice.

Keyamo said, “It remains suspended. It was never Air Nigeria. It was not Air Nigeria. That’s the truth. It was only painted Nigeria Air. It was Ethiopian Airlines trying to flag our flag.

“If it is so, why not allow our local plane to fly our flag? So nobody should dispute that it was Nigeria Air.

“Air Nigeria must be indigenous, must be wholly Nigerian, and must be for the full benefits of Nigeria, not that 50 per cent of the profit is for another country.”

Speaking further, Alade said, “There is a way out. We have met all their major international creditors. Afreximbank is one of them. They (Arik) are owing Afreximbank about $52m.”

After negotiations, he said the airline was only willing to take $8.5m out of the $52m.

“However, where will that $8.5m come from? Where? AMCON doesn’t have money of his own to put there? And then they negotiated and said, okay, ‘let’s take some of the engines of those things away in full and final settlement’. 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. And 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 stated.