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Two aviation experts have asked the Federal Government to ignore proposals to convert Arik Air and Aero Contractors into a national carrier, arguing that such a step would create more problems for any airline that emerges from that process.
Chris Aligbe, an aviation consultant, said that Hadi Sirika, Minister of Aviation, should rather take immediate steps to facilitate the formation of Nigeria Air.
Aligbe, who spoke in an interview in Lagos on Monday said there was no going back on achieving a national airline because of booby-traps associated with converting the two carriers – Aero and Arik Air – private carriers into a government airline.
Recall that Ahmed Kuru, Chief Executive Officer (CEO) of Asset Management Corporation of Nigeria (AMCON) proposed that the federal government should merge Arik and Aero Contractors into a national carrier.
He argued that if the two carriers were owned by the government, they would have been taken over by the Ministry of Aviation and not AMCON, which major brief was to recover debts.
Aligbe said the option of converting two carriers that were not doing well into a national carrier was fraught with a lot of intractable challenges, which will serve as disincentive to would be investors .
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Aligbe said the clamour for a national carrier has become imperative because of the grossly inadequate operational strength of domestic airlines.
“And so today, virtually the entire industry and, indeed, the vast majority of stakeholders are either clamouring for or desirous of a befitting national carrier.
“There are still a few who believe that Aero and Arik are airlines that belong to the government. It is not true. If they were, they would be under Aviation not AMCON that has no statutory responsibility on aviation but rather on debt collection.
“Any attempt to move outside this statute will occasion international litigations that could be unresolved for many years. This is because both the original owners and creditors will head to court to challenge the Federal Government.”
He posed a few questions to buttress his opinion: “Can any healthy and virile establishment be founded on the back of unhealthy and struggling entities? Will any sensible investor invest in such establishment?
He concluded by saying that “where no investors come, such a national carrier will exist on 100 per cent government equity, just like the liquidated Nigeria Airways”.
John Ojikutu, a member of aviation industry think tank group, Aviation Round Table (ART) and chief executive of Centurion Securities, told BusinessDay that he once supported the taking over of the two airlines and their merger into a national carrier when he thought their debts were owed only to government aviation intervention funds.
According to him, unfortunately, as events were unfolding, it became clearer that there were debts owed to other creditors, including international creditors.
“What I thought AMCON would have done was to assess the two airlines’ total assets and liabilities and look for foreign technical partners to buy into it and operate the merged airlines as a flag carrier. It was obvious to some of us that when the merger did not occur, the government was not interested in Arik in particular probably because of its external debts.
“AMCON was really on a goose chase in Arik that was indebted to the tune of N300bn. It was very clear to any discerning mind that nobody can operate the airline with the present fleet and in the present domestic and regional routes and recover the airline from the debts in 30 years if they cannot make an annual net profit of N10billion. That is practicable,” Ojikutu said.
He stressed that nobody would buy the airline in its present state at a cost that can recover it from the debts it is owning in the next 20 years except it is sold at a loss to the creditors including the government.
