FG May Merge Arik and Aero Contractors to Form New National Carrier

The Asset Management Corporation of Nigeria (AMCON) has hinted at plans to merge Arik Air and Aero Contractors into a new national carrier. This proposal comes amidst mounting financial challenges faced by the two airlines.

AMCON’s Managing Director/Chief Executive Officer, Gbenga Alade, revealed this during an interactive session with media executives in Lagos on Monday. Alade disclosed that both airlines are grappling with substantial debts, making their financial recovery uncertain. He emphasized that merging them into a national carrier could be the best solution to their financial woes.

Alade shared that the idea of converting Arik and Aero Contractors into a national carrier had previously been proposed to the former Minister of Aviation but was rejected. “The former management of AMCON presented the idea, but it did not gain traction with the previous aviation minister. However, we believe it is still a viable option and plan to present it again,” Alade stated.

The suggestion to merge these airlines comes after the controversial launch of Nigeria Air, which was introduced by former Minister of Aviation, Hadi Sirika, just days before the end of former President Muhammadu Buhari’s administration. The ownership structure of Nigeria Air, where Ethiopian Airlines held a 49% equity stake, had drawn significant criticism from stakeholders, including the House of Representatives, which called for the suspension of the national carrier project, labeling it a fraud. The project was subsequently suspended by the current Minister of Aviation, Festus Keyamo, who criticized the arrangement as not being genuinely Nigerian.

Alade also addressed the ongoing legal and financial struggles facing Arik and Aero Contractors, describing the situation as a significant challenge for AMCON. He highlighted that Arik owes around $52 million to Afreximbank, but has only been able to offer $8.5 million in repayment, a situation he described as untenable. “The debts are so large that even negotiated settlements are difficult to manage,” he said, noting that the failure to resolve these issues could spell the end for Arik.

AMCON took over the management of Aero Contractors in 2016 and Arik Air in 2017 due to their inability to meet debt obligations, which amounted to several billions of naira. Despite efforts to stabilize these airlines, the financial pressures continue to mount.

In addition to discussing the future of Arik and Aero Contractors, Alade outlined AMCON’s broader strategy to recover nearly N5 trillion in outstanding debts. He revealed that AMCON plans to employ international asset tracers to recover assets hidden offshore by recalcitrant debtors. Since the new management took over five months ago, AMCON has recovered approximately N100 billion from high-profile debtors.

Alade stressed the importance of government support in these recovery efforts, noting strong backing from President Bola Tinubu, the Central Bank of Nigeria, and other key federal agencies. He also announced plans for a major stakeholders’ conference later this year, where the challenges of non-performing loans will be addressed.

Alade concluded by emphasizing the critical importance of resolving issues in key sectors like oil, gas, power, and telecommunications, which he believes will significantly boost Nigeria’s economic output and create jobs. AMCON is currently working on reviving dormant assets in these sectors to stimulate growth and improve the overall business environment in the country.