INTERVIEW

The new Chief Executive Officer of Nigeria’s oldest airline, Aero Contractors, Captain Ado Sanusi says his management has fashioned out a blueprint to turnaround the airline. He spoke to Chinedu Eze. Excerpts:

The Asset Management Corporation of Nigeria (AMCON) in 2011 took over Aero, but from 2011 till now there is no sign of reviving Aero, now they have taken over Arik, people are very pessimistic, what is your take on it?

I will not agree with you 100 per cent that there is no hope for Aero Contractors with AMCON taking over. Of course you knew very well that Aero Contractors was underperforming; had gone through distress, went through crisis and now we are into the crisis management and hopefully we should stabilise and then start the recovery process. This is a normal process a distress company will go through for a turn around. You see it underperforming, going through distress phase then it goes through crisis, then you do a crisis management, then you stabilise it and then you go into recovery phase. Now, if in the crisis management phase you do not get the right personnel to do it, it might delay the recovery process. I do not think you should blame AMCON for delaying the recovery process. AMCON position always is to save the industry to make sure it does not collapse. If the crisis management of that particular company that is in distress takes a bit longer or they make their wrong decisions at a particular point, that is something to discuss about.

But in a process where a company is underperforming, has gone through distress, has gone through crisis phase and now it is in the crisis management, it is either you allow it to go to failure, which means it is liquidated and sold and it rests in peace. Or you manage the crisis, stabilize it and then you start your recovery. So if you are looking at companies, I believe that Aero Contractors is on its way to recovery. Of course the crisis management may have taken longer but the understanding is that for every company there is a unique way to recover from its problems that it encountered.

What are your plans to rejuvenate the airline, working in tandem with AMCON?

First, what you need to look at is that you are already managing a crisis, you have high personnel cost, you have high cost of operation; you have very limited capacity, that is two aircraft in the fixed wing and one aircraft in the rotor wing. So you have to look at the crisis that you are in and see how you can manage it. What we did was first of all study it for the first 21 days when we came in and we decided that definitely personnel cost must be reduced to reflect the number of aircraft that we have both rotor and fixed wing. The next step was to identify the business module of the company, which will bring revenue. So you have oil and gas, you have Maintenance, Repair and Overhaul (MRO) and then you have the mainstream airline. For oil and gas we have only one helicopter. We do not have so much even for the fixed wing, then for the MRO, it was dwindling revenue that it was providing. The mainstream airline only has two aircraft. So what we had to do is to consolidate everything, streamline the workforce in reality with what we have. Aero Contractors is making revenue but we cannot put all the revenue we are making into personnel cost.

We have to make sure that the brand-Aero Contractors that is known for safety must be maintained at all times. So what we did was reduce the personnel cost and look at the revenue we have and plough it back into maintaining that safety standard of Aero Contactors. I am sure you have heard in the media that we have cut almost 60% of our workforce. We did that not because the revenue was not there, no, the revenue was there but to take the whole of that revenue, which is what the workers wanted or some of the workers wanted and plough all that revenue into personnel cost, forgetting the safety aspect and the critical items that we need to work on. So we took that difficult decision to reduce the personnel cost, and we managed to exit about 60 per cent of our workforce considering that there is the maintenance part, which must be well staffed.

And then also going back to the core competence of Aero Contractors, which is oil and gas; we are paying attention to oil and gas to make sure that we serve the oil and gas community. We are also placing emphasis on the mainstream airline business. Now we have two aircraft, from one aircraft when I came and in the next two to three weeks we will have three aircraft. We intend to take the fleet to six. On the helicopter side we have one now, in the next two to three weeks we will have two helicopters flying and we intend to take the fleet to six before the end of the year. So that is the stabilisation mode that we are in, for the recovery, we intend to go into lease agreement with a lot of leasing companies to see how we can recover. Of course my mandate is to make sure that we move the company from where it is to a sellable point where people can invest; investors can come with their money and then recover it. And I believe that it is a very good venture for people to invest in because Aero has an amazing positive brand name.

You know when Arik was taken over by AMCON; there was this allegation that you backstabbed the Chairman of the airline by quickly taking over this Aero job, despite the significant position you held in Arik?

Well, there is nothing to defend. If anybody is very conversant with court rulings, court orders, appointment of receiver manager, and taking over of companies then there is very little to say about it. But if people are not conversant with those processes and procedures then of course there is room for allegation, finger pointing, accusation and all of that. But I think it is a very simple thing; everybody knows that it was by court order that the takeover of Arik was done. They came to the compound with a valid court order. I was not even in the compound at that time, they served it to the company lawyer, the lawyer read it and said it is valid. I came to the compound and I asked the company lawyer and he told me that this is a valid court order. And exactly what I said as the then Deputy Managing Director of Arik Air, was that we have been served with a court order and as responsible corporate citizens, we will abide with the court order.

I also said Arik has the right to challenge this court order or to appeal the court order or to do anything in court because this is the rule of law and everybody is given a fair chance. So that is what I said and that was the role I played. Pertaining to the offer of Aero Contractors job, you see in life I believe there is time for everything, there was a time when I joined Arik and there will be a time when I will leave Arik. There was a time when I was brought into this world; there will be a time when I will leave the world. So there is a time for everything in life and when you realize there is a time for everything and you believe and put all your things in the hands of God then you will not have any problem.

I was offered the job of Aero Contractors way before the takeover process. And I confided in my boss, the MD, I told him, I confided in my Chairman, I told him, I confided with my family, I told them and I also prayed about it because it is a decision I have to make, I was not born in Arik. I left somewhere to come to Arik, so I told everybody, of course it was a decision I had to make and after a long period of trying to make that decision, because the offer was made to me, I can remember, I think towards the beginning of the year but it was made to me, I did not hide it, I told the Chairman, I told my boss, I told everybody. And I took the offer before the takeover, and as I said, God has a destiny for everybody and we pray that we know the destiny and that we are not chasing shadow, that is my prayer for everybody.

The present government talked about three key issues in the industry, which include airport concession, the establishment of a national carrier and attraction of maintenance facility, but so far, there is no sign that any of these would be achieved in the foreseeable future. What is your take on these promises?

 

Well, if you say that the government is not doing anything I do not think I will agree with you because it is not the true reflection of what is happening in the sector. I believe the government is doing a lot; there are so many things that are being done behind the scene. The rot in the aviation industry is not something that could be cleaned up in a couple of months or in 36 months.

You know when you have a free fall, first you have to stop the free fall and then you can now start recovering before you start making progress. So I believe there are lots of things that are being done behind the scene and by the time we are going to start seeing the fruits of it you will see that a lot has been done. Bu the vision of the federal government is to first look at what caused this rot and then address them and I believe that is seen in the way they are involving a lot of stakeholders to find ways to move the industry forward.

Of course, there will be disagreements, there will be complaints of the pace at which the progress is being made and that is normal in a democratic setting; people have to criticize and constructive criticisms are very healthy and they are good for good governance. So I believe that a lot is being done behind the scene and the government of the day has no other choice than to make it work and to do the right thing to ensure that the aviation industry is repositioned where it belongs. It is the catalyst for economic growth. I sincerely believe the federal government has put a lot of emphasis on moving the industry forward.

It is believed that if we have airfield lightening in all the airports it will enable all the airlines to operate for more hours and enhance their profitability. Also if aviation fuel is available at good prices it will also help the airlines. What role do you think government should play to solve these problems?

First and foremost, I have to say that the federal government through the Minister of State, Aviation, Senator Hadi Sirika, has done considerably well to address the aviation fuel scarcity and also to address the prices of the product. Recently I have seen so many letters coming to my office for the oil marketers for downward review of the price for Jet A1, which means that the polices that they have put in place two to three months ago is now working.  And with the interaction I have been having with the fuel marketers, they are assuring that with the new policy that they have seen, the fuel scarcity will be a thing of the past especially as it concerns Jet A1.

On the issue of the pricing, I think there is a lot to be done, I believe the infrastructure must be worked on and that is my appeal to the federal government to look at the infrastructure especially in Lagos. From Apapa to the airport, there should be a pipeline that would transport this fuel. Because the issue of seeing at times 200 to 300 tankers in our airports or close to our airport is an eyesore and I believe we should do something to stop that. It will also reduce the cost, it will ensure free flow of the product and it is going to also enhance safety. This infrastructure improvement should go all the way to all the other airports in the country; we should try and take comprehensive look at delivery of Jet A1 to most of the airports in the country. It is an integral part of aviation; you cannot have an airport without sustainable supply of Jet A1. So it has to be looked at holistically, but I believe that with what we are seeing now they will definitely address the situation.

On the issue of airfield lighting, I have always said that we should not have at this point in history of our country whereby state governments would build airports and allow them to operate only daylight flights; they should be 24 hours. You cannot have an airport and you say it is only 6:00 am to 6:00 pm. Such daylight airports are supposed to be local government airports or private airstrips or very, very strong small aerodromes. But as far as a state that has an airport that serves the people, it should be a 24-hour airport or at least should have the capacity to do a 24-hour service.

This is also in case of safety, in case you want to fly a patient out of the airport to a bigger hospital in another state, it also gives you that opportunity and that capacity to do it. So I believe all the airports should have airfield lighting, it is not something that is very expensive. It is something that we just need to put a policy in place and it can be implemented. We can use solar lighting for the airports that are hardly used, it is something that can be achieved if we deliberately put a policy together and ensure that it is being followed. The technology for the solar lighting for the airport is a proven technology and I think it can be implemented in most of these airports that are not high traffic airports.

Do you think that these oil tankers at the airport will expose the airport to fire and insecurity?

Of course, they are a danger to the public safety, they are also not the best to have close to the airport and they also constitute security hazard because in case somebody with bad intension wants to start something, he can go and do that and then cause a lot of havoc. The moment you have a concentration of over 300 fuel tankers carrying highly inflammable liquid, then there is safety concerns. So I think it is very important that the federal government looks at it as quickly as possible. This is something that can be done through private public partnership (PPP) and the pipeline can pay for itself, because now we are paying a lot of money to transport it and if we put 50 percent of that into making sure the pipe works, of course it will have a huge safety impact.

Are you optimistic that there will be a turnaround of the industry?

I believe there will be a turnaround of the industry; I believe we cannot go below this point in the history of our aviation industry; I believe if we go any further in this, then it is a total collapse of the industry.  So I think the turnaround is just by the corner, I think we are just managing the crisis now, I believe the stabilisation is coming in and the moment you do that you start the recovery process. And I believe there will be a lot of policies that will be rolled out in the near future to ensure sustainability of the aviation industry. The biggest problem that we have in the industry is to have a viable airline that is sustainable.  And I think Nigeria is capable of taking three major airlines that are viable. Among the three major airlines, I believe at least two could do regional and one can do regional and international and one can be domestic. I believe the market is there, I believe we can harmonise this industry in such a way that it can be sustainable.

The era of failing airlines should be a thing of the past and I think we should look at doing things differently. Because the problems is, if we continue to do things the same way you are doing and you keep failing then there is something wrong. We must not allow status quo to continue, we must do something differently so that we can get a different result. But if we keep doing something and we keep getting the same result that means there is something wrong in what we are doing, so we have to do something differently to get a better result.

You previously held the view that you do not support national carrier; do you still hold that view?

It is not that I do not believe in national carrier, I have always said that the country is undergoing recession; the country is undergoing a lot of challenges in other sectors.  And I said my belief is that for the federal government to put money down to start an airline would not be a priority, and I still maintain that. I still maintain that there are so many sectors in the country that require more money than establishing an airline. Having said that, that does not mean the federal government should not look at the aviation sector in total and support it. It should support it because it is the key in the economic growth of the country. But if you ask me if the federal government has $50 million to put into an airline to start a national carrier and they can put that $50 million in healthcare, I think it is a noble area, they should put it in healthcare.

This is because more citizens of the country will benefit more in the healthcare that they are going to put the money in rather than starting an airline with $50 million. You can only buy, probably if you are lucky two to three new aircraft, turbo props or you can even buy one Boeing aircraft. So the investment of that amount of money for a country that is undergoing a lot of challenges would not be a priority at least for now.

You know from the beginning Ethiopian Airlines was enthusiastic of coming to play a role in Arik, but from the feelers we are getting from Ethiopia, it is like they want to come back to takeover?

Well, I cannot talk for Ethiopian Airlines but I do not think that we have exhausted all possible avenues to put up a team together. Managing airline is not something that is rocket science, so I do not think we have exhausted all possible avenues in Nigeria to see that we put a team together. We need to put together an expert team that is very good in finance/risk management, corporate governance and commercial. I do not think that out of the over 180 million people that we have, we cannot come up with a very good team that can run a formidable airline. After all, we have people running banks successfully so why can’t we replicate what is happening in the banking industry in the aviation industry.

People should understand and let us demystify this aviation industry.  Of course, everybody that sees an airplane flying will think that it is a mystery seeing this metal flying in the air. But believe me, it is the same principle of economics, accounting and human resource management that are applied in most of the banks and most of the successful companies that can be applied in an airline. The only thing that is a mystery behind the metal in the air is technology. So I do not think there is any mystery behind aviation management, it is the same economics, it is the same accountancy, human resources, corporate governance, it is the same disciplinary approach that is applied when you are managing a company.

When will Aero’s maintenance facility begin to carry out checks up to C-level?

This is something that can happen in the next six months. I am looking at, say; in the next six months I want the Nigerian Civil Aviation Authority (NCAA) to give me approval to do C-check. I was pleasantly surprised when I joined Aero Contractors because of the capabilities of the Maintenance Repair Overhaul (MRO). Aero’s MRO is capable of doing up to C-check if given the chance. I believe they have the capacity, I believe they need a little bit of tooling and maybe a little bit of manpower to do it. But what I have seen in the capacity of the MRO of Aero, I am pleasantly surprised. And I did not know that an MRO capacity has been established this far in this country and the level of experience of the staff.

So I believe not two years, in the next six months, that is my belief. I am in discussion with a lot of maintenance organisations that the NCAA has given them an approval to do C-check outside the country. So why can’t I bring that maintenance and do it myself here? We have the capacity, we just need a little bit more tooling and we need a little bit of expertise to bring that. Yes, we have the shortfall of having a hangar that can take a full Boeing B737 in and close the doors, yes we have that limitation. But there is a way around it, we can hire a hangar, we can also see whether they are movable hangars.

We are talking to people to see whether they can come up with moveable hangars so that they can come and put a hangar for us temporarily while we are looking at C-check. But believe me, when we have another interview in the next three or six months I will let you know that we have the capacity of doing a C-check on a B737 aircraft right here in Nigeria.