Stakeholders express concerns over Arik Air, as AMCON allays fear

Concerns have been expressed and mounted over one of Nigeria’s major airliner, Arik Air as stakeholders in the aviation industry have said that the airline might find it difficult to operate due to the financial issues the company is facing. 

According to a reliable source who spoke to ThisDay, the management of the airline was finding it difficult to keep aircraft in the air due to its inability to maintain most of the fleet it inherited. The management has also been accused of misappropriating funds while also deploying lean resources to lease aircraft and engines. 

More details: In addition to what the first source said, another reliable source who did not want his name mentioned accused the management of lack of prudence, while alleging that it bought landing gear and other aircraft parts at very expensive prices in connivance with management officials, when there are other reliable sources where these spares could be bought at cheaper prices. 

The anonymous individual explained that since the airline was taken over on February 9, 2017, by Asset Management Corporation of Nigeria (AMCON), Arik Air had not been able to keep up to 10 aircraft operational.

“Despite the fact that the new management has over 16 aircraft at its behest, it has not been able to carry out maintenance on many of them; rather, it has secured two Bombardier CRJ 900 from a Tunisian airline on wet-lease agreement and it has been looking to lease more aircraft from unwilling lessors. 

 “Arik has lost about 40 per cent of its 3,000 staff, closed some local destinations, stopped all its international destinations: London, Johannesburg and New York and is alleged to be currently facing cash crunch and may not be bailed by AMCON, which is a subsidiary of the Central Bank of Nigeria (CBN),” the source said. 

AMCON’s response: Jude Nwauzor, spokesperson of AMCON while responding to the allegation described it as false. He denied that the airline might go under while also stating that the management of the airline was not facing any financial issue. On the report that the airline had made attempts to lease aircraft, a Boeing 737 Classic, Nwauzor said it was not true that the airline did not try to lease any aircraft. 

“This claim is completely false. Arik was at the air show to discuss new planes and the future of Arik with important stakeholders. We have two running wet leases and have others being considered for approval. You do not go to air show to seek wet leases. 

 “The source of this information is uninformed. We have several unsolicited wet lease offers. We carefully check to see what will be appropriate for the company. However, as an airline, we face challenges in the international space because the airline has been battered by years of wanton defaults on agreed obligations to reputable third parties like Lufthansa, AFREXIM, Amadeus, KLM, EDC, etc. 

 “We have fixed some of these relationships and the impact will be felt in 2020. We are current on all new obligations and enjoy the respect of counter parties we do business with. We are quite proud of this,” Nwauzor said. 

Arik Air under AMCON: As reported by Nairametrics, the business started picking up in Arik Air after the appointment of the Receiver Manager and new management team. Before AMCON’s intervention, the On-time Performance (OTP) had fallen to 19%, but after the takeover, the OTP climbed up steadily and currently averages 63.5%, while cancellations, which were as high as 40% as at January 2017, has been significantly reduced to less than 4%. Average load factor is currently over 73% whilst aircraft utilization has also increased by about 50%.

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