Of Labour’s Compromise and Aero Contractors’ Resurgence

0

The aviation workers’ union would have to make more concessions to meet the conditions given by the Asset Management Corporation of Nigeria for the rebirth of Aero Contractors. Otherwise, labour’s intransigence could result in the re-enactment of the demise of Nigeria Airways, writes Chinedu Eze

It was scheduled last week that Aero offices would re-open this week and workers would be admitted to the premises, as their umbrella union continues to negotiate with management of the company over workers’ welfare and severance package.

Although more compromise was expected to be reached this week, but there are indications that labour has conceded that the airline would lay off some workers, showing strongly their determination to ensure that the airline resumes operations, thus defying the believe of sceptics that the airline has gone for good.

The workers have agreed in part that Aero must have to downsize before it would be able to fly again, so the crux of the matter for labour is, what would be the severance package of the staff that would lose their jobs. Labour came to this inevitability when it was made to understand that that may be the only choice if the airline would resume operation again.

Background

Aero Contractors on September 1, 2016 announced that it would stop all schedule services until further notice, while it continues charter and rotor services, involving its helicopter operations.

THISDAY learnt that before that announcement, the management of the company had been negotiating with the workers on layoff and what would be their severance package. The labour union during the negotiation insisted that advanced payment of rent and other advances made to the staff be repaid; rather, those workers would have to be paid their severance package by Aero. Negotiation came to a cul-de-sac when Asset Management Corporation of Nigeria (AMCON) through the Receiver Manager and in collaboration with the management stopped the airline’s scheduled services.

On September 1, 2016, the Chief Executive Officer of Aero, Capt. Fola Akinkuotu said the decision to stop scheduled services was part of the strategic business realignment to reposition the airline and return it to the part of profitability.

The airline said this business decision, which was as a result of the current economic situation in the country, had forced some other airlines to suspend operation or out rightly pull out of Nigeria.

In the case of Aero, Akinkuotu said the airline had faced grave challenges in the past six months, which impacted on its business and by extension the scheduled services operations.

“These factors, according to him are both internal and external environmental factors that have made it difficult for the foremost airline to continue its scheduled services,” the airline said.

He said during the period in review, Aero, which was hitherto revered for its safety, timeliness among other virtues witnessed epileptic operations and services to the external publics that are caused by non-alignment of fundamental issue of the business, which in some cases had been frustrating and embarrassing to all parties including staff, customers and indeed all stakeholders.

“As part of its resolve to ensure the airline survived unlike most other carriers that experienced short life span in the country, Asset Management Corporation of Nigeria (AMCON) had appointed Mr. Adeniyi Adegbomire SAN as Receiver Manager in February 6, 2016, with the aim of turning the airline around. Since AMCON’s intervention in Aero Contractors in 2011, it has provided support for the airline to meet working capital requirements and fleet expansion. These were to ensure the airline remains a going concern providing services to various clients and the general public.

“Unfortunately, the operating environment within and outside the airline have hindered any possible progress especially in the last six months when the Naira depreciated against the dollar thus making it impossible for the airline to achieve its operational targets,” Akinkuotu also said.

Public Hearing

A fortnight ago there was public hearing on how to rebound the aviation industry organised by the House Committee on Aviation. The one-week event witnessed a lot of revelations. It provided a platform for officials of AMCON to state their position on the beleaguered 57-year old airline, Aero Contractors. AMCON among other things made it clear that the airline must downsize before it would consider moves to bring the airline back to normal flight operations. Indications also showed that it was contemplating having a partner to help the airline re-fleet and possibly make funds available. But besides the present challenges besetting the airline, it has enviable safety record and invaluable goodwill.

The first step to reposition Aero is to unburden it of the huge overhead and salary emoluments by trimming down the workforce in tandem with the number of aircraft presently available for the airline. This means that over 60 percent of the 1, 300 workers would go.

Bloated Workforce

It has been the position of the Aero management that the organisation has a bloated workforce, considering the fact that it used to operate over 15 aircraft in its fleet but when it resumes operation it may start with four Boeing 737 and possibly two or three small body aircraft, Bombardier Q300. The number of workers ought to be compatible with the number of equipment in the airline fleet. This, the management said, would enable it to effectively management its meagre resources and maximise its revenue. The airline also stressed that those workers laid off might return to the company when it turns the corner and begins to operate profitably, as it would need more workers with the addition of more aircraft in its fleet.

“Of course, the airline will always re-absorb its old workers, which it imparted skills over the years, who know the tradition of the company than to go outside to seek new hands,” said an insider.

THISDAY spoke the Chairman of the Air Transport Service Senior Staff Association (ATSSSAN) in Aero, Lewis Emakpo, who confirmed that labour has continued discussions with Aero management and expressed optimism that they would reach amicable resolution and the airline would bounce back.

“Before that crisis that led to the suspension of scheduled services by Aero we were into negotiation. We agreed with management that the staff was too much and we were in the middle of negotiation when the airline stopped operation. The disagreement we were having then was that the management said some of the workers who had collected advancement of credit facility would part with some money as they are laid off. The severance package they wanted to pay the staff was considered inadequate by the workers, so we requested that the staff should be properly disengaged. The workers are willing to leave,” Emakpo said.

Intervention of National Assembly

The labour leader commended the National Assembly, both the House and the Senate for their intervention in what is happening in the aviation industry, saying that without their intervention AMCON and labour might not have made any headway towards bringing back Aero Contractors.

“Now the management of Aero, labour and AMCON are reaching a compromise. AMCON is listening and they made it clear to us that they are determined to ensure that the airline is back. Last week we had a meeting with the Receiver Manager, Mr. Adeniyi and we told him that the severance package the management is giving the workers is very small but we agreed that they will open the place so that we will know those who will go and the ones that will remain. We are expected to also meet this week, Wednesday and Thursday. We are confident about the airline because AMCON told us that the airline would not be allowed to go down.

Severance Package

“We the union agreed that the workforce is over bloated so there will be downsizing, but the management should give them what they deserve. How can somebody work for 12 to 15 year and he will be asked to refund money when you want to disengage him? The management said they don’t want what happened in 2008 when it disengaged some workers to happen now because the company does not have money,” Emakpo said.

But a senior management official in Aero who spoke to THISDAY confirmed some of the things Emakpo said. He agreed there was a consensus that the office would be reopened this week and there would be “a meeting of minds on the issues. We have not finalised. We are going to finanlise the severance package next week (this week). Labour has agreed on the reduction of the workforce.”

“Negotiation is still on. Those who took advanced credit facility like house rent will have to pay but labour said they ought not to pay,” the official said.

On whether the airline would partner with international carriers, the official said the Aero was open for negotiations, “nobody would want to partner with the airline if there is industrial partisanship. Labour has to shift so that we arrive at a compromise. That will give rise to the amicable resolution of the problem. There is no agreement yet but there is hope that everything will work out as planned,” the official also said.

Revamping Aero

While fielding questions at the public hearing organised by the House Committee on Aviation a fortnight ago, an official of AMCON, William Ayodele said the government agency had the objective to turnaround and revamp the airline when it took it over in 2011. But according to the House members, AMCON has failed to realise its set objective because since it took over the airline its fortunes have been dwindling. In fact, the House said AMCON has not made sufficient investment in the airline.

AMCON said its mandate was to buy and restructure the airline. The restructuring was to convert the debts to equity. The agency said it funded the airline to acquire aircraft and engines. It sent letters to lessors as shareholder that held 60 percent of the equity so that it would lease aircraft to the airline.

But a member of the House Committee on Aviation who was obviously dissatisfied with the role AMCON played in the airline since it took it over said, “The involvement of AMCON in Aero Contractors was a mistake. It does not have the capacity to handle aviation organisation like Aero,” he said.

Many industry observers are eager to see Aero resume operation. There is also a lurking fear that the demise of Aero may be augury of the collapse of indigenous airline industry.