Controversy trails AMCON’s plan to merge Arik with a new airline

By Ade Jacobs

Controversy has trailed the plan by the assets management Company, AMCON to establish a new airline alongside Arik Air, even though the government liquidator and the billionaire Joseph Arumemi-Ikhide owned airline had yet to make categorical statements on the report.

Reports emerged at the weekend that the government agency was planning to merge the assets of Arik and Aero contractor, the two airlines liquidated by AMCON three years ago, to form Eagle Airline before the first half of the year.

The report quoted a source as saying that “We are not trying to merge Arik and Aero. We are trying to strategically assemble all our aviation portfolios under one umbrella. The challenge of selling Aero is humongous. The challenge of Arik is even double. Our interest is not in the branding level, it is in our portfolio – the money we invested over the years to protect these airlines.

“The management gave us a strategy. The one we did with the Bank of Industry. A lot of money was pumped into those airlines and that is why they are still standing till today. I am sure you heard when Ethiopian Airlines was rumoured to want to buy Arik.

“Why you hear of a debt profile of close to N300bn, it is very scary. If you assemble all your assets under a fresh umbrella, dealing with the thing will be easy. That is what management is trying to do. Even the idea of merging the two airlines is difficult. That is what is going on.”

Aviation industry experts are, however, divided on the powers of AMCON under its enabling Acts, to establish an airline as a regulator.

AMCON has failed to sell the liquidated airlines to new buyers, more than three years after it took them over as a result of billions of naira debt owned by the local airlines to commercial banks in the country. Arik was taken over in February 2017, a year after Aero Contractors was seized by AMCON.

Speaking on the issue, Chika Nbonu, a business expert said investors are not willing to invest in the airlines to forestall unnecessary legal entanglement that may arise from such transactions, apart from the problem of commercial viability due to apathy by air travelers to state owned airlines. He said the huge debt issues are preventing investors from buying the airlines.

The agency was established in 2010 to buy over bad debts from commercial banks in the country, in order to save the banks from total collapse due to debt overhang. Its mandate is to recover debt from debtor companies and individuals.

Apparently, this has been impossible with the debtors of both Arik and Aero Contractors, and the failed attempts to sell the airlines to new owners have further left the agency with no other option than to combine their assets to form Eagle Airline by June this year, sources in AMCON said.

The move is to pool the assets of the two airlines together, especially aircrafts to assist the bad debt managers to recover its investments in the two carriers ahead of their winding down within two years. AMCON is targeting at least 10 aero planes from the two carriers to commence the business, according to those privy to the arrangement.

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