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Arik Air, Nigeria’s largest airline by passenger numbers has seen a stabilisation of its operations two months since the intervention by the Asset management Corporation of Nigeria (AMCON) to “instill sanity” and prevent “a major catastrophe” in the aviation industry of Africa’s most populous nation.
AMCON has injected about N1.5 billion into Arik Air since the takeover in February, according to Roy Ilegbodu, Chief Executive Officer (CEO) of the airline in an interview with Businessday in Lagos.
“AMCONs intervention was very timely because the company might have folded up in a couple of months,” Ilegbodu said.
“From about 30 airplanes only 10 were functional at the time AMCON took over. There were also no spare parts as cannibalisation of the fleet was the order of the day.”
Since AMCONs intervention Arik Air has managed to gain back the confidence of creditors who hitherto refused to do business with the airline, said Ilegbodu.
Customer confidence which was low due to cancelled flights was also returning with Arik moving over 3,000 passengers on Friday alone across Nigeria.
The Airline was saddled with huge debts beyond what was owed AMCON, to include third party creditors, and a receiver manager is on ground in the United Kingdom (UK) to engage with them, according to Ilegbodu.
Consulting firm KPMG has also been hired to audit the books of Arik Air which will give a true position of where the company is, the CEO said.
“We have taken charge of operations and since safety is critical we have scaled back local operations and suspended international flights for now,” Ilegbodu said.
Arik Air is currently operating 8 aircrafts with plans to nearly double capacity to 14 aircrafts by mid-May.
AMCON took over Arik Air in February after the heavily indebted airline which had not paid workers for months and has had aircraft seized for non-payment of leases cancelled its service to New York and grounded 10 aircraft.
In a symptom of the decay one of Arik Airs relatively new Airbus planes valued at $72 million is currently being parked in the international airport and not properly stored.
“The cost of bringing back that plane to service will be quite enormous,” Ilegbodu said.
Arik has seen its passenger numbers go up tremendously from January levels and has managed to mostly clear the backlog of unpaid salaries owed to staff, according to Ilegbodu.
Arik Air has made a lot of refunds to customers and is currently paying some N60 million to N75 million a week to customers who bought tickets in the past but had flights cancelled.
Arik is the biggest airline in West Africa and used to ferry about 55 percent of domestic flights in Nigeria as well as transcontinental routes to London and New York.
In a February statement the government said its decision to intervene in the airline “clearly underscores a commitment to instil sanity in the country’s aviation sector to prevent a major catastrophe.”
It blamed Arik’s “heavy financial debt burden, bad corporate governance, erratic operational challenges and other issues that required immediate intervention.”
Airlines have been hard hit by Nigeria’s currency crisis, with tickets paid in devalued naira but scarce foreign currency needed for fuel.
“The stability of the currency is an issue as it can derail the best business plans,” said Ilegbodu.
“With AMCON support we have been able to source spare parts and go back to stability.”
