Arik faces liquidation over N387b bad debts

Arik faces liquidation over N387b bad debtsArik Air risks being sold or liquidated by the Federal Government. Already, the Asset Management Corporation of Nigeria (AMCON) has filed an affidavit at the Federal High Court, Lagos in a bid to recover its debts put in excess of N387 billion.

The Guardian reported that government is contemplating selling off or liquidating the airline to recoup its investment in view of its rising debt profile.

If government carries out the plan, the local air travel operations will shrink by 40 per cent, with attendant dip in revenue of government agencies.

In the affidavit filed before Justice Mohammed Idris, Arik was accused of owing N418.89 million on airplanes’ insurance policy; N4.586 billion unremitted pension funds as well as indebtedness of N28.34 billion, N9.45 billion and N632.5 million to Zenith, Access banks and Amadeus Marketing Nigeria.

The list included N3.8 million liability to Marriot and Best Western Hotel; diversion of N2 billion for conversion of two passengers airplanes to cargo facilities; unlawful withdrawal of N2 billion from the airline’s account as well as N300 billion owed various aviation ancillary services among others.

The document said Arik also owed its maintenance company, Lufthansa Technik Group, €31million (N10 billion) and other West African aviation authorities in excess of $6.5 million (N2 billion).

AMCON had on February 8, 2017 taken over the management of the airline to recover its debt following a court order. The airline currently runs partial operations with nine serviceable airplanes out of the 28 aircraft fleet-size.

A top source in the agency yesterday told media that the means of recovering the “overwhelming debt burden of Arik is currently a source of worry and government will soon decide on the matter.

“I know that very soon something will happen. It was by government’s decision that we took over Arik. AMCON never wanted it, given what we have seen with Aero Contractors. But the corporation was mandated to take over. Aviation is a very minute session of companies we manage on behalf of government, but they seem to be the most difficult to deal with.”

He continued: “What we are seeing in Arik is so unbelievable. But AMCON will not continue to keep Arik for so long, even if we can recover the debt. As things stand, the Federal Government will have to take the final decision which may just be the initial plan to liquidate the place and sell off its assets.”

The corporation’s Head of Corporate Communications, Jude Nwauzor, who confirmed the plan, said AMCON had a sunset clause in its enabling Act and would, in due course, discontinue the management of the airline among other businesses. He said that the state of things at Arik gave little or no hope, with the debt profile expanding by the day.

He noted: “It is a far cry from what the Federal Government expected. Even if given 25 years, they would still not have been able to pay the debts. Today, AMCON has injected N1.5 billion to run the airline since it took over, but the rot is so overwhelming.”

The media consultant to the new management, Simon Tumba, said the debt burden notwithstanding, the firm was committed to enhancing value, improving customer experience as well as sustaining the safety, reliable and secure operational antecedents of the airline.

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