The Asset Management and Corporation of Nigeria (AMCON) has proposed a potential merger between Arik Air and Aero Contractors, with the aim of establishing a national carrier.

This was disclosed by AMCON’s Managing Director/Chief Executive Officer, Gbenga Alade, during an interactive session with media executives in Lagos on Monday.

According to Alade, both Arik Air and Aero Contractors are facing significant financial challenges, making it difficult for them to meet their obligations.

In light of this situation, AMCON presented the idea of consolidating the two airlines and transforming them into a national carrier to the former aviation minister, but the proposal was not approved.

“The former management of AMCON presented the idea of converting Arik and Aero to a national carrier. But the former aviation minister did not buy the idea. We will present it again because that is the best option.

“Unfortunately, the special purpose vehicle that was created by the former management of AMCON for the conversion of Arik and Aero to a national carrier had been sold. But we can create another SPV this,” he explained.

It is important to remember that Hadi Sirika, the former Minister of Aviation, introduced Nigeria Air just three days prior to the conclusion of former President Muhammadu Buhari’s term. This initiative raised significant concerns among stakeholders regarding the ownership structure, which allocated a 49 percent equity stake to Ethiopian Airlines.

The Federal Government held a 5 percent stake, while a consortium of three Nigerian investors controlled 46 percent.

In response to this arrangement, the House of Representatives called for the suspension of Nigeria Air's operations in June 2023, labeling it a fraudulent endeavor. Subsequently, in August 2023, the current minister, Festus Keyamo, declared that the national carrier project would be on hold indefinitely.

Keyamo emphasized, “It remains suspended. It was never Air Nigeria. It was not Air Nigeria. That’s the truth. It was only painted Nigeria Air. It was Ethiopian Airlines trying to flag our flag. If it is so, why not allow our local plane to fly our flag? So nobody should dispute that it was Nigeria Air.”

“Air Nigeria must be indigenous, must be wholly Nigerian, and must be for the full benefits of Nigeria, not that 50 per cent of the profit is for another country.”

A Federal High Court in Lagos has recently put a stop to the sale of Nigeria Air to Ethiopian Airlines.

The court ruled that the transaction involving the shares of Nigeria Air was null and void after reviewing the relevant issues in the case. Justice Ambrose Lewis-Allagoa instructed that the Federal Government's initiative to create a national carrier, Nigeria Air, be suspended.

This ruling was made in favor of the Registered Trustees of the Airline Operators of Nigeria along with five other stakeholders in the aviation sector.

During a briefing on Monday, Alade expressed his concerns about the current situation of Arik and Aero Contractors, stating it has been a source of significant worry for him.

“Believe me, it is a very difficult problem to resolve, and it is giving me sleepless nights, particularly Arik.

“Arik is owing so much that they cannot pay,” he stated.

Continuing the conversation, Alade stated, “There is a way out. We have met all their major international creditors. Afreximbank is one of them. They (Arik) are owing Afreximbank about $52m.”

Following negotiations, the airline indicated a willingness to accept $8.5 million of the $52 million.

“However, where will that $8.5m come from? Where? AMCON doesn’t have money of his own to put there? And then they negotiated and said, okay, ‘let’s take some of the engines of those things away in full and final settlement’. And the truth is that, if they took those engines away, Arik is finished.

“But we said ‘no, we cannot allow you to take it away. Let AMCON give you a kind of bank guarantee. And we will stretch it so that three planes are flying now and by the Lord’s grace, by February next year, we want to make seven planes fly for Arik,” he stated.

The Nigerian Airspace Management Agency has suspended operations of aircraft belonging to Arik Air following a court order initiated by the airline's creditor, billionaire Arthur Eze. Eze sought legal action to address an outstanding payment of $2.5 million owed to him by Arik Air's founder, Johnson Arumemi-Ikhide.

According to a statement from NAMA's spokesperson, Abdullahi Musa, this action was a result of an enforcement order issued by the FCT High Court on July 19, 2024, which involved seizing Arik's aircraft to secure the debt.

In 2016, the Asset Management Corporation of Nigeria (AMCON) assumed control of Aero Contractors after disbanding its board and appointing an interim manager to oversee operations. AMCON stated that this takeover was part of its mandate to acquire eligible bank assets and utilize them profitably.

Likewise, Arik Air, established by Arumemi Johnson, was taken over by AMCON in 2017 due to the airline's failure to meet its substantial debt obligations. AMCON had assumed the debts owed to local banks by Arik.

Last year, the corporation urged Arik's owners to submit a viable debt resolution plan to the bad debts manager if they wished to recover the airline from the Federal Government.

AMCON's initiatives for asset recovery

In an effort to reclaim outstanding debts totaling nearly N5 trillion, Alade has announced plans to collaborate with international asset tracing firms to identify and recover assets concealed by uncooperative debtors abroad, including those disguised under special purpose vehicles.

Alade highlighted that since the new management assumed control approximately five months ago, they have successfully retrieved around N100 billion from various prominent debtors and have restructured the sale of certain assets.

He underscored the strong backing the organization has received from President Bola Tinubu, the Central Bank Governor, the Federal Ministry of Finance, the Attorney General of the Federation, and the National Assembly in their pursuit of debts transferred to AMCON by banks during various phases of eligible bank asset acquisition.

The AMCON CEO noted that the chairman of the House Committee on Finance has committed to publicly identifying and shaming debtors who have not yet settled their obligations at a significant stakeholders' conference scheduled before the year's end.

He also disclosed plans to host a conference inviting senior officials from the Central Bank of Nigeria, relevant ministries, banks, and the judiciary to address the challenges associated with non-performing loans in the nation.

He expressed optimism that resolving issues related to assets in the oil and gas sector would enhance production, increase foreign exchange earnings, and create job opportunities for citizens.

He pointed out that the corporation has achieved notable success with two of these assets in under five months.

In the power sector, he revealed that AMCON has made substantial advancements with one of the largest distribution companies and a previously abandoned power project in Kaduna.

Alade highlighted the significant effects of resolving power issues in Nigeria, noting that certain banks with around 400 branches nationwide allocate nearly N500 billion each year for diesel to fuel their generators.

He asserted that improving the power sector would greatly enhance the overall business climate.

Furthermore, Alade mentioned that AMCON is actively engaged in the telecommunications sector, focusing on revitalizing inactive assets and restoring them to functionality.