An Arik Air plane
By Chinedu Eze
Nigeria’s major carrier, Arik Air has secured a credit facility amounting to $2 billion (N361 billion) from international financiers to acquire new aircraft, including the Boeing B787 Dreamliner.
Chairman of the company, Mr. Joseph Arumemi Ikhide, who disclosed this at a press conference to mark the sixth anniversary of the airline, said the debts owed Nigerian banks were guarantees as all the major debts it owed were to foreign financiers, including the $500 million it borrowed from European banks to fund the acquisition of three Airbus aircraft.
The Arik chairman said considering the age of the aircraft fleet the airline has, the debts it owes were not too much, adding that the airline had even under borrowed.
“If you tell somebody Arik owes N84 billion debt and they see the aircraft and they see the age of the aircraft, they laugh because that is under borrowing. Each of those aircraft that you see, the B737-800, the way we configure it takes up $96 million (over N15 billion) apiece.
“That amount can buy all the aircraft of all other airlines in Nigeria put together. The B737=800, go and check it. That is why we use it to London. It is not every B737-800 that you can use to London, but we can use our own to London,” he said.
He explained that the Asset Management Corporation of Nigeria (AMCON) took over the debts it owed Union Bank Plc because the bank was to refinance the credit facility it got from Europe, which was facilitated by the then French Minister of Finance, Christen Laggard, who is
“Some of the debts they said we owe are guarantees; they are not cash. Some of these so called debts that everybody jumps at are not cash. Let me give an example, when we were to get the A340-500, the French Finance Minister when we met she said she would give me Airbus aircraft and asked why was I buying Boeing and I said because the Americans give me money and she said we will give you in Europe too and I said okay and she said, I have three Airbus aircraft and I said I will take them. She said you are not up to five years old, why don’t you get the Nigerian banks to give you the guaranty.
“They said that they wanted their money within seven years and Union Bank was to refinance it, which we all agree and we filled the form. Of course banking reform came and the new management in Union Bank came and said they don’t want it and that was how they drove us to AMCON. So all these saying that we owe debts everywhere is just out of ignorance.”
Arumemi Ikhide also said the airline was considering going public and that it had already started the process.
“We too have engaged the services of Lloyd and Associate and they are looking at the value of Arik as we speak. We took Lloyd and Associate because of their experience and they are valuing Arik, our network, everything. When they come and bring the report then we now go down to the stock market and divest some percentage to the public. So there is no intention of somebody holding the company. If you hold it, life is very short…”
The airline is also partnering with Lufthansa Technik to establish a Maintenance, Repair and Overhaul (MRO) facility for aircraft maintenance in Nigeria.
Arik also said it has carried over 10.2 million passengers in the six years it has operated, holds 65 per cent of the market share of domestic traffic.
Speaking also, the Managing Director of the airline, Mr. Chris Ndulue, explained that the airline was planning to build an academy in Benin City, Edo State in addition to expanding its maintenance hangar in Lagos.
He explained that in the next year, the airline would expand its route network into many destinations and called on the Central Bank of Nigeria (CBN) to review the policy of not giving out loans to domestic carriers, noting that investment in aviation requires huge funds.