AMCON: Bleak Future for Aero, Arik Air

Asset Management Corporation of Nigeria (AMCON) took over Nigeria’s foremost carrier, Aero Contractors and a promising airline, Arik Air, after taking over Nigeria Airways Limited over issues of debts.

Since the takeover of both firms, by AMCON, the airlines have recorded diminishing performance, while their debts continue to rise, writes Chinedu Eze.

After the COVID-19 lockdown was lifted for flights in Nigeria in June 2020, a tall, dark man, maybe in his early 50s, walked into an office owned by private operator at the Murtala Muhammed International Airport, Lagos and sat down. The owner of the office had been waiting for him. The visitor brought out his phone and showed the pictures of one Boeing 737-700 owned by Arik Air that was cannibalised.

Every  technical equipment in the aircraft cockpit was stripped, leaving the carcass of the airframe, the cabin and the livery.

THISDAY made enquiries and a source from Arik Air said that the parts from the cannibalised aircraft were used to repair others. But further investigation indicated that it was not only the aircraft that was photographed that was cannibalised. It was alleged that there had been arbitrary use of aircraft spares between Aero Contractors and Arik Air, especially on Bombardier Q400 owned by Arik Air and Q300 owned by Aero Contractors. In fact, THISDAY confirmed that many parts from Arik Dash 8 aircraft were used on the Aero Dash 8, including engines.

Such was the level of the cooperation between the two airlines under receivership of the Asset Management Corporation of Nigeria (AMCON).


In February 2016, AMCON fully took over the management of Aero Contractors after it dissolved the board of the company. It thereafter appointed a manager to run the affairs of the company in interim capacity.  So the Corporation became both the majority shareholder and creditor of Aero Contractors. Five years before then, in 2011, AMCON had intervened to save the company based on N14 billion debt profile. As a result, AMCON took 60 per cent stake in the company, leaving 40 per cent to legacy shareholders, the Ibru family, with an agreement that the shareholders manage the company through their representatives. But after over the five –year period, and despite further investment AMCON made in Aero, the airline’s debt profile had grown to about N20 billion by 2016. But not without the allegation of financial mismanagement and the controversies that marred the then administration of the airline.

Aero Contractors is Nigeria’s oldest aviation company. It commenced business in 1959, initially providing services to oil and gas sector, before venturing into fix wing operations in the year 2000.

Also in February 2017, AMCON took over Arik Air and became the receiver manager at the time the airline has 17 airworthy aircraft, including Boeing B737-700, 800, Bombardier CRJ 900, 100 and Bombardier Q400 and staff of over 3200.

In fact, informed source told THISDAY in 2021, that, “AMCON took over Arik Air with 17 airworthy aircraft; in addition two aircraft just needed minor maintenance of maximum six hours to fix. Also three aircraft were ferried for checks overseas. Rather than fix the aircraft and maintain them properly, AMCOM cannibalised some Boeing 737 Next Generation aircraft. They have the heart to cannibalise such aircraft! Most of the other aircraft like Bombardier CRJ 900 are parked without maintenance and also Bombardier Q400. They only operate few of the Arik aircraft are supplemented with wet leased aircraft, which is from Mongolia and Value Jet of Tunisia, which they obtained through some questionable deals.”

Although Arik Air management is niggard about the number of aircraft under its operation currently, but the airline does not have more than five aircraft from the original fleet it inherited from the former management, AMCON literally toppled the company under forceful take over in 2017.

AMCON’s Intervention

What has been established by industry stakeholders and analysts is that if AMCON did not intervene in Aero when it did, the airline would have gone under many years ago. They also agree that AMCON stepping into Arik Air also saved the airline. So AMCON provided the two airlines the elixir that sustained their existence till this day.

The Managing Director/CEO of 7 Star Global Hangar Nigeria Limited, Isaac Balami, who spent many years working for Aero, told THISDAY that AMCON tried to rescue Aero Contractors when it took it over. It injected billions of naira into the airline, but after some time the agency felt it would not continue to inject funds into the airline, recalling that during that period the federal government and the then Minister of Aviation were worried and wanted to safeguard the jobs of the personnel and that explained why it continued to operate till the recent shut down; although there were times it stopped operation temporarily before it was revived in 2017.

Former CEO of the Airline, who took over the management in 2017, Captain Ado Sanusi, acknowledged that AMCON timely intervention saved Aero Contractors. Sanusi, who revived the maintenance department that brought resurgence of hope in the airline, noted that AMCON gave life to Aero Contractors. 

The Managing Director of the airline, Captain Abdullahi Mahmood told THISDAY that without the financial intervention at critical periods, Aero Contractors would have gone under.

Also in Arik Air, the former management was reported to have been bereft of operational funds and was waiting for quick credit extension from Afrexim Bank when AMCON stepped in. in October the previous year, there was one day the airline did not operate due to insurance issues, as the local insurer was unable to source for forex to pay for the insurance of the fleet.

Industry analysts believe that Arik Air and Aero Contractors have different experience when it comes to AMCON management. Many who spoke to THISDAY believe that AMCON failed in Aero. In Arik Air, the airline was operating when it was taken over by AMCON. The reason it took over was because of debts owed it, aviation agencies and others.

““For some time now, the airline, which carries about 55 per cent of the load in the country, has been going through difficult times that are attributable to its bad corporate governance, erratic operational challenges, inability to pay staff salaries and heavy debt burden among other issues, which led to the call for authorities in the country to intervene before Arik goes under like many before it,” AMCON justifying the take over of the airline in a statement on February 9, 2017.

But senior official of Arik Air who has been working with the airline said AMCON’s intervention would have saved the airline but it was still operating when it was taken over.

“We believe that the airline would have gone under if AMCON did not intervene. But the owner was also looking for funds and would have been able to source the funds. He was having serious discussion with Afrexim Bank then.

“But what I can say is that AMCON has made its mistakes, but they improved staff welfare. Arik Air is the first airline in Nigeria that receives its salary before 28th of every month. That is one good thing about AMCON. They also improved workers’ condition of service. I wish to also say that AMCON failed woefully in Aero for whatever reason but they did not fail in Arik. They reason why Arik Air is still strong today is because of the foundation laid by the founder of the airline,” he said.

But out of 3200 workers inherited by AMCON, about 600 are still in the employment of Arik Air today and out of 17 aircraft it took over, only five are currently operating; although some are still at maintenance facilities overseas.

Solid Structure

Development strategist and former senior staff of Arik Air, Lanre Bamgboshe, told THISDAY that Arik Air was built on solid structure that was inimitable and has sustained the airline till date.

The founder (Sir Joseph Arumemi-Ikhide) established Operations Control Centre (OCC) that was top notch. When Emirates Airline contingent did a tour of Arik facilities they were amazed at what we had. Arik had spare parts inventory for all its aircraft types that ran into millions of dollars. The airline had highly trained personnel and working with Lufthansa Technik put the airline ahead of its contemporaries. The airline was technically advanced and no airline has come close in comparison. So in terms of operational manpower, technical skills, training and equipment, Arik Air stands very solid and remains the best airline in Nigeria till today.

Before establishing Arik Air, Arumemi-Ikhide came with wealth of experience as senior executive at General Electric. With that he built strong relationship with US Exim, which financed most of the Boeing 737 NG fleet, Export Credit Agency of Canada, which financed the Bombardier fleet. These are the some of the goodwill he brought into the country, which we have frittered away because of the system we are in. So, you see, these international financiers worked with Arik Air. Nigerian banks only provided guarantees. And these credits were serviced effectively without default; despite the fact that we were paying in dollars while earning our revenues in naira.


Industry observers are aghast that despite the period AMCON has managed Aero and Arik Air it still claims that it is hugely owed by these airlines.  Last year a former Director in Arik Air told THISDAY, “Suffice it to say that AMCON claimed that it intervened to save Arik from huge debts but in almost five years of operation, AMCON has failed to service any of the debts it claimed it inherited. Furthermore, the mortgage on the Bombardier aircraft was not serviced and AMCON used the aircraft before parking them due to lack of maintenance.

“Arik Air did not borrow money from Union Bank Plc. The bank guaranteed Arik loan from HSBC London but in 2010 CBN changed its policy and changed the guarantee into debts and treated it as on balance sheet asset. The guarantee was changed to local currency with high interest rate without any discussion with management of Arik Air. Before that action was taken, Arik was effectively servicing that loan to the satisfaction of HSBC, London.”


Reacting to the status of Aero Contractors and Arik Air, industry expert and Secretary General of Aviation Round Table (ART), Group Captain John Ojikutu (rtd), said AMCON literally bulldozed its way into the aviation industry by taking up the management of airlines, which it lacks the needed competences.

“I am not surprised. First, AMCON may be a financial management entity but not a commercial aviation entity and has no knowledge of how commercial aviation works. Secondly, the manner the two airlines got credits from banks and government intervention funds had no credible assessments. At the time of the receivership of Arik and Aero by AMCON, I said that it would be a miracle to recover the total debt Arik and Aero owed banks. Both airlines today are pipeline for some persons to continue draining and suckling more funds from them until they are confirmed dead; dead to the extent that the original owners may not be able to recover their bodies,” he said.

He also made a recommendation, “Let me repeat what I have said at the beginning:  assess the assets and debts of the two airlines both local and external; look out for credible foreign technical partners and investors to buy these to recover their debts through their investments and convert the airlines to two flag carriers.

“Unfortunately, the way we are going, the original owners may return to sue the government to demand for compensation if they are not involved in the process that eventually killed their airlines. It will be another manner of financial exploitation by those in government and their political allies outside the government,” Ojikutu said.

In the aviation industry, AMCON is described by many as an undertaker. It has not done anything to prove that appellation wrong. Rather, many see the gathering dark clouds that may envelop the two airlines into oblivion under its receivership, if urgent action is not taken.

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