‘Local, Foreign Investors Showing Interest in Arik’

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Chinedu Eze

Arik Air has said that local and foreign investors have indicated interest in the airline following the impressive performance of the airline in receivership.

In a statement signed by the Receiver Manager of the company, Oluseye Opasanya, the airline management said past attempts to resolve the debt issue with legacy shareholders had been frustrated by their insincerity exemplified by the presentation of fake and bogus investment proposals (false financial backing), confirming the lack of corporate governance and diligence in their approach to business.

Arik Air made this known in reaction to a publication by THISDAY indicating that investors have not shown firm interest to buy or invest in the airline.

“We assure the flying public that Arik in receivership is operationally sound, professionally run and safe and will continue to be a major and dominant carrier in the aviation industry.

“The appointment of a Receiver Manager (RM) (and new management team) by the Asset Management Corporation of Nigeria (AMCON) on February 9, 2017 was the measure that saved the airline from doom and imminent collapse. When the Receiver Manager came onboard on February 9, 2017, the airline’s status as a going concern was gravely threatened due to its poor management,” the statement said.

It also noted that the fleet was down to only eight serviceable aircraft, many of its assets were abandoned in different parts of the world and the maintenance hangar littered with unserviceable aircraft and related equipment when the new management took over the airline.

“Even some of the serviceable aircraft were due for various checks. Staff was being owed between four to six months’ salary and staff morale was at the lowest ebb. Fleet insurance was due and the airline basically struggled to pay the premium. Vendors were being owed colossal amount of trade debts to the extent that no oil marketer was willing to advance trade credit to the airline,” Arik Air management also said.

The statement recalled that the former management found it extremely difficult to pay for fuel and as a result flight cancellation was rife, on-time performance (OTP), which is a measure of an airline’s ability to meet scheduled flight time plummeted leading to significant customer attrition and loss of confidence.

“Furthermore, regulatory agencies were owed incredulous amounts of money and by way of example, passenger service charges impressed with trust collected on behalf of the government had not been remitted for several years. So also were huge sums of money deducted from workers’ salaries over many years, which were not remitted to Pension companies. The flying public was equally owed several millions of Naira and foreign currencies on account of unflown tickets and cancelled flights,” the management said.

It disclosed that when it took over it tried to rebuild the company and the OTP, which had fallen abysmally to 19 per cent a month before AMCON’s intervention, climbed up steadily and currently averages 63.5 per cent; cancellations, which were as high as 40 per cent as at January 2017, has been significantly reduced to less than four per cent and average load factor is currently over 73 per cent whilst aircraft utilisation has also increased by about 50 per cent.

Arik Air explained, “It has to be stated that the shareholders of the company neglected the most basic requirement of airline operations by refusing to build up any maintenance reserve in support of the operations. Most regrettably, most of the aircraft and related assets fell due for heavy maintenance about a year into the receivership.

“Without the benefit of maintenance reserves, Arik was inevitably confronted with a financial storm, which would have sank the airline but for the help of AMCON and prudent management by the Receivership team. There has been a gradual increase in the number of serviceable aircraft as a result of huge investments in fleet maintenance. In the first and second quarter of 2018, the fleet serviceable planes increased to 13. The claim that the fleet of serviceable planes fell to three is patently false.”