The Asset Management Corporation of Nigeria is exploring the possibility of merging Arik Air and Aero Contractors to create a national carrier.
This potential move was disclosed by AMCON’s Managing Director and CEO, Gbenga Alade, during an interactive session with the media in Lagos on Monday, according to The Punch.
Alade revealed that both airlines are heavily indebted and may be unable to meet their financial obligations.
He also mentioned that AMCON had previously proposed this merger to the former Minister of Aviation, but the suggestion was rejected.
“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 this,” he explained.
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 has raised concerns among stakeholders regarding the ownership structure, which grants Ethiopian Airlines a 49% equity stake in the proposed national carrier.
The Federal Government holds a 5% equity share, while a consortium of three Nigerian investors controls the remaining 46%.
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.”
Recently, a Federal High Court in Lagos halted the sale of Nigeria Air to Ethiopian Airlines, declaring the transaction null and void.
The court, presided over by Justice Ambrose Lewis-Allagoa, ruled against the sale after reviewing the issues presented in the case.
At the briefing on Monday, Alade said the present status of Arik and Aero Contractors had been giving him sleepless nights.
“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 stated.
He further 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.”
Following negotiations, he revealed that the airline was only willing to accept $8.5 million out of the $52 million initially proposed.
“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.
