Tuesday , 5 July 2022
Arik Air 320-200 at the Dubai - International, United Arab Emirates. Copyright of Airliners.net

How AMCON’s intervention saved Arik Air from total collapse

MYRIAD of challenges outweighing what the previous management could deal with under its owner-manager business model may have led to the grounding of Arik Air on Monday next week if cogent  steps were not taken by government to intervene in Nigeria’s largest airline through the Asset Management Company of Nigeria (AMCON)

According to information gathered, the airline’s insurance cover  would have expired on February 12 and creditors were already breathing down the airlines neck, staff were being owed long months of salaries thereby compromising safety of flight operations and the airline’s 28 aircraft fleet was deflated to 10 operational.

A source at AMCON who spoke to nigerianflightdeck.com enumerated the series of problems the airline has been going through some, self-inflicted, stating that AMCON’s intervention will help the airline stay afloat and offer flight services seamlessly.

Reeling out some of the challenges AMCON in its statement announcing its takeover of Arik said the airline has been in a precarious situation largely attributable to its heavy financial debt burden, bad corporate governance, erratic operational challenges and other issues, that required immediate intervention in order to guarantee the continued survival of the Airline.

The statement read in part,” Yesterday, Arik temporarily suspended its flight operations to the John F. Kennedy International Airport, New York, United States, claiming that the two Airbus A330-200 aircraft dedicated to the route have been taken to France for C check at the same time. Equally more than eight aircrafts are currently grounded at the tarmac making it difficult to meet their routine commercial flights.”

“The myriad of issues confronting Arik Air of late ranges from confiscation of aircraft due to non-payment of leases, frequent flight delays, constant fracas between Arik Staff and irate passengers at both local and international airports etc. During the last yuletide season, passengers were stranded in airports all over the country due to Arik’s incessant flight delays and cancellations, which negatively affected the preference they enjoy from passengers. “

AMCON revealed that the airline is so overwhelmed to the extent that the worker’s wages are not paid for several months, leading to occasional confrontation between the management of Arik and different Aviation Unions in the country.

“ It was Arik’s inability to pay its workers for seven months that forced the United Labour Congress (ULC) and Engineers Union to recently shut the offices of the Airline across the country causing untold hardship to thousands of travelers and an embarrassment to the aviation sector in the country.”

“ Besides owing workers’ salaries, the airline has also not been remitting the taxes of workers to relevant bodies thus also defrauding the country. The airline is also in perpetual default in its lease payments and insurance premium, leading to regular and embarrassing repossession of its aircraft by Lessors. Various class actions are pending against the airline all over the world,’ the statement read further.

However a source who spoke to Nigerianflightdeck.com said that AMCON’s arrival was right on time and that  within 24 hours of intervention by the government, Arik Air is receiving  the much-needed assistance to be able to offer flight services.

“Following its intervention yesterday (Thursday), it has now been gathered that virtually all of Arik’s trade creditors are being owed, staff salaries have not been paid for between 4- 6 months, and of the 28 aircraft in Arik’s fleet, only 10 are in operation. “

“Due to AMCON’s intervention, flights are operating and the insurance cover for the aircraft which would have expired on Sunday, 12 February has now been sorted and trade creditors and fuel marketers have been assured that all indebtedness will be looked into; they have offered to support the new management to get operations run smoothly.”

“ Flight schedule may therefore be realigned to match the 10 aircraft in the fleet, while also sorting out the myriad of problems confronting the airline. It is obvious that without Government intervention Arik would have virtually stopped operation by Monday of next week,” he said.

He further said,”AMCON is making efforts to return the aircraft in various parts of the world in repair yards, with the aim of stabilizing the airline to offer safe, secure and timely services to customers.”

Signs were already rife that things were not well with the airline as it held the record for most cancelled and delayed flights for three years running, consistently blaming these cancellations majority of which were self-inflicted cancellation on unavailability of Jet  A1.

Recall sometime last year that Arik Air was stopped from flying by authorities when it was revealed that the aircraft belonging to the carrier all had expired insurance in one day, a feat that would seem impossible especially as these aircraft were all bought at different times under different conditions.

Even then experts queried that if the aircraft were under group insurance, the trend would not be the first time it was happening .

Then like Bellview airlines before it went down, Arik Air commenced a series of flight cancellations and delays which the airline would always blame on unavailability of Jet A1 also known as aviation fuel of which stakeholders analysts argued that  the airline used unavailability to hide the huge debt of hundreds of millions the airline owed marketers.

The unions and Arik Air were consistently at loggerheads as the former always blamed the airline of owing  aviation agencies which has led to hardships ion its workers a situation that has led the unions to picket the airline on numerous occasions, a trend that was immediately reversed from Abuja to protect passengers who always got the short end of the stick anytime this happened.

Rescuing Arik will take a multi-pronged approach of which AMCON seem to have started by taken over management and ownership , appointing the receiver manager  who seem to have started by engaging the staff who are the core of the business as well as the airlines auxiliaries to ensure that the airline doesn’t go under the burden of indebtedness.

More however, needs to be done to launder the brand of Arik Air which has become synonymous with delays, cancellations and every other negative vice that could ever have happen to any airline, it is the hope that this intervention would set the airline towards the path best  business practices and return consumer confidence to a brand that suddenly crashed.


About NigerianFlightDeck

Nigerianflightdeck is an online news and magazine platform reporting business stories with a bias for aviation and travel. It is borne out of the intention to inform, educate as well as alter perceptions with balanced reportage.

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