AMCON’s Unending Foray in Aero, Arik Air

AMCON’s Unending Foray in Aero, Arik Air

As Asset Management Corporation of Nigeria gets set to wind down, Chinedu Eze
looks at the activities of the agency in the aviation industry, especially its
contributions in Aero Contractors and Arik Air

Since President Ahmed Bola Tinubu assumed office, there has been indications
that the Asset Management Corporation of Nigeria (AMCON) will wind down its
activities, a development that was recently confirmed by a renowned lawyer, and
Senior Advocate of Nigeria (SAN), Femi Falana.
Aviation industry stakeholders are asking the question, what happens to Aero
Contractors, which the agency has major stake of 60 per cent and Arik Air, which
is currently lame after it was taken over by AMCON in 2017?
The two major airlines seem to be a shadow of what they used to be in the past
when they robustly dominated Nigeria’s air travel market. Aero, which came to be
over 62 years ago, still enjoys the reputation of inimitable goodwill and enviable
safety record. But today, with barely three aircraft to its name, the airline is in a
quagmire and in dire need of capitalisation. Arik Air, which was allegedly
mismanaged by AMCON, is waiting to be salvaged hopefully with the total
withdrawal of AMCON.

Aero Contractors’ Resuscitation
Many industry experts insist that Aero Contractors would have become extinct
without the intervention of AMCON. The airline was almost swept into bankruptcy
by bad management, when it acquired old aircraft at exorbitant prices. The airline
paid hugely for the aged Boeing 737 classics at the cost that dug a big hole in the
finances of the airline and set the stage for its extinction. It was at that stage that
AMCON stepped in to salvage it.

By the time AMCON took over the management of Aero Contractors in February
2016, the hitherto foremost airline was at its nadir. There was no money to run the
airline; the aircraft in its fleet were largely moribund and in dire need for
maintenance. Besides, the labour unions were restive because it looked inevitable
that workers in the company would lose their jobs.

This was sequel to the aforementioned financial hiccups suffered by the airline,
when it became insolvent, which prompted AMCON to take it over, absorbed its
debts and faced the mandate to rejuvenate it.
It was learnt that even after AMCON took over, things didn’t start looking up
immediately. Spokesman of AMCON, Mr. Jude Nwauzor recalled then that during
the period, AMCON was gauging the best way to manage the airline out of

With new management under Captain Ado Sanusi Aero was able to rebuild its
Maintenance, Repair and Overhaul (MRO) facility in 2018 and it has upgraded it
to the level that it could maintain Boeing B737 aircraft to C-check level, the first
time in Nigeria.

The Managing Director and CEO of Aero Contractors, Captain Ado Sanusi, told
THISDAY in exclusive telephone interview on Wednesday that currently the
airline has one helicopter still operating. It also has one Bombardier Dash 8, Q300
and one Boeing 737 Classic, which it leased from Cross River state, Cally Air.
Sanusi also disclosed that the airline is conducting a check (maintenance) on its
own Boeing 737 Classic, which would be completed in few weeks.

“So, by the end of September we shall have four aircraft, which will include one
helicopter, one Dash 8 and two Boeing 737 Classics, ”he said.
Sanusi also disclosed that the airline’s maintenance arm is still on-going and Aero
has been able to pay the workers’ salaries, which was kept up to date, since Sanusi
took charge of the airline.
Although AMCON still has 60 per cent of the shares of the airline, it is not getting
any funding from the government agency and the stakes still subsists, but Sanusi
expressed the belief that before AMCON would wound down, it would divest its
shares to any interested party that wished to invest in the airline.

“We are not getting funding from AMCON, but the airline is still under AMCON.
I am aware that AMCON is in the process of divesting its shares from the airline
and I know it will do that before it winds down. The agency cannot leave the
shares it has till it winds down,” he said.
Last year the airline existence was threatened under a previous management before
Sanusi was reappointed to manage it.

Aero Contractors is in dire need of funding. It is the only airline that has
maintenance facility, which if funded to acquire modern aircraft has the resilience
and technical ability to survive for a long time.
Sanusi told THISDAY last year, “The airline needs fleet renewal without which it
cannot survive. External factors include high cost of aviation fuel, scarcity and
high cost of forex, low passenger traffic, which was extraordinarily very low.
When I left the airline it had a good chance of survival, even coming out of
receivership. But it needed strict financial management.”
Arik Air

But AMCON’s incursion into Arik Air is a different narrative. Many observers in
the aviation industry have expressed the opinion that AMCON taking over the
management of Arik Air was ill-advised because it did not have the competences
and technical know-how to manage the airline. Today, the airline is almost
moribund after apparent mismanagement.
Recently, renowned lawyer and activist, Mr Femi Falana observed that AMCON
ran Arik Air down, prompting him to petition the Economic and Financial Crimes
Commission (EFCC), which carried out comprehensive investigation into how the
airline was being run.
He said that in addition to stripping the airline of its assets worth billions of Naira,
the management under receivership still fraudulently incurred debts of about N120

“There is a body they call AMCON. This agency will take over an organization,
run it down and employees are sacked and once it is under AMCON’s management
nobody wants to do business with that company. So, what kind of economy is this?
It must be a kalo-kalo economic system. We have problems now flying in the
country. The aviation industry is in crisis. AMCON took over Arik Air six years
ago and Arik at that time had 17 aircraft. Some banks owed by the airline had an
arrangement with Arik.Passengers would pay for their tickets and the banks would
deduct their own share from the money and leave the rest to the airline for its
operations. But AMCON took over, appointed a Senior Advocate of Nigeria
(SAN) who had no aviation experience except travelling by air and made him Arik
Air’s Receiver Manager.

“The man knew he was running the place aground and decided to withdraw as the
receiver manager of the airline. Then AMCON appointed another person without
court order and the man took over. They decided to take loans. They decided to
destroy the company. Two aircraft were cannibalized; one valued at $37 million
and another one valued at $42 million. They were cannibalized and sold by an
agency owned by a legitimate government. Today, we now discovered that Arik
Air that had 17 aircraft now has only two. We wrote petition to EFCC. In addition
to this, the people who took over Arik have committed fraud to the tune of N120
billion. EFCC has confirmed this. What did the government do? The new
government said, what is our business as government with managing debts? The
banks are rich enough to sue those who owe them. The President has decided it is
going to abolish AMCON,” Falana said in a recent interview with Channels


The future of Arik Air, which was once Nigeria’s biggest airline, is uncertain.
Although the founder and Director of the airline, Sir Johnson Arumemi Ikhide
along with another Director, Mrs. Mary Ikhide sued AMCON over the destruction
of the company but it is clear that government must have to intervene to enable
Arik Air have a future. Many in the aviation industry and other sectors of the
economy have suggested variously that what AMCON did with Arik Air and other
companies they took over was a disincentive to investment. They could not
understand how a government agency could take over companies and instead of
recuperating them they would be made moribund.
However, on the issue of Arik Air, AMCON had always insisted that if it did not
step in to take over the management of the airline when it did, the airline would
have gone under.

And recently the Asset Management Corporation of Nigeria said it recovered N1.6
trillion from bad debtors in 10 years of its existence.
The Managing Director, AMCON, Lawan Kuru, said, “Out of total of N4.66trn,
we have so far recovered about N1.6tn in the more than 10 years of our existence.
We still have a long way to go! About 350 obligors account for N3.96tn, which is
above 84 per cent of total outstanding amount.
“Our debt is in the balance sheet of the Central Bank of Nigeria, and therefore a
threat to the economy. After recovery and disposal, funds are paid directly into our
CBN account. Recovery and disposal of assets have so far contributed about
N1.6tn towards settling our obligation.”

However, it was learnt that before the wind down of the agency, there would be a
change of management and the new person, whom government is still looking for,
would be known as sole administrator. His objective would be to wind down
AMCON and see whether some of the companies literally castrated by the agency
would be revived.
“They are looking for somebody that will come and replace Kuru. The new person
will be known as Sole Administrator and his mandate will be to wind down the
agency,” informed source told THISDAY.

Former senior official of Arik Air, who spoke to THISDAY, said: “Arik Air did
not have any case of non-performing loans, AMCON scheme was simply a
grabbing plot executed to erode the shareholders capital, destroy the airline and
give birth to the so called NG Eagle . It was without doubt all thought out from day
one , but like so many things not based on truth, equity and justice , it will collapse.
They cleverly ran down over 19 New Generation aircraft, closed down all
intercontinental, regional routes, and some domestic routes, threw out over $100
million worth of international airport slots in London Heathrow and J. F Kennedy
Airport,New York in US. And yet, AMCON Receiver Manager cannot render
accounts. With what happened to Arik Air, AMCON has exposed Nigeria to the

rest of the world with regards to respecting international treaties and commercial

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