The Asset Management Corporation of Nigeria, a Federal Government-owned bad debt manager has reached an advanced stage of its plan towards launching a multibillion-naira airline.
AMCON which owns controlling stakes in both Arik Air and Aerocontactors Airlines chose to establish the new airline as a clever means of wriggling out of the multibillion-naira liabilities currently hanging on the two ailing carriers.
AMCON is expected to make an official statement on the deal very soon. It was however gathered from an anonymous source that the new international airline, to be named Nigeria Eagle, may take to the sky with at least 10 aircrafts as soon as June.
The bad debt manager was established by the Federal Government in 2010 to buy over bad debts from commercial banks in order to save the banking system from imminent collapse.
AMCON has a mandate to recover bank loans from several companies whose bad debts had been bought over. It therefore took over the management of Arik and Aero some years back following the two airlines’ inability to continue servicing their debts running into several billions of naira.
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The bad debt manager has a mandate to recover bank loans from several companies whose bad debts had been bought over by AMCON.
Reports which have not been confirmed said AMCON had made attempts to sell the two airlines apparently due to their huge liabilities and likely litigation from the original owners but buyers were not forthcoming due to the huge debt profile of the airlines.
Ahead of its winding down in 2023, AMCON has decided to pool its assets in the two carriers in order to help it recover its investment.
A top AMCON official familiar with the deal revealed that the bad debt manager is not trying to merge Arik and Aero but trying to strategically assemble all its aviation portfolios under one umbrella.
The top official said “The management gave us a strategy. The one we did with Bank of Industry. A lot of money was pumped into those airlines and that is why they are still standing till today. I am sure you heard when Ethiopian Airlines was rumoured to want to buy Arik.
“Why you hear of a debt profile of close to N300bn, it is very scary. If you assemble all your assets under a fresh umbrella, dealing with the thing will be easy. That is what management is trying to do. Even the idea of merging the two airlines is difficult. That is what is going on.”
According to aviation industry sources, AMCON has gone as far as 80 per cent of the steps it needs to take towards setting up the carrier.
Giving further insight on the proposed Nigerian Eagle, the official said, “Apart from Arik and Aero, we have other aviation assets. We have something with Dana and Afrijet; there are a couple of aviation assets we have scattered here and there. These are what we want to assemble under one umbrella
“It is not going to be a merger, it is like let us say you gave Company ‘A’ about 20 buses to start a transport business on the condition that at the end of every year, it pays you N1bn. Now you decide to collect the entire money and assets and give it to Company ‘B’ and ask it to run the business because it is more responsible than Company ‘A’. That is why I said it is not going to be a merger but a strategic realignment of the portfolios.”
However, there are concerns in the aviation industry that the original owners of Arik and Aero may take AMCON to court over the current move. But another top official of AMCON allayed such fears.
He said, “The thing is that we have over 3,000 cases in court. I don’t think there is any institution that owes us serious money that is not in court with us. They have a strategy of delay; they keep delaying until they say AMCON has wound down and everybody will go and take their money. From day one of the takeover, they have been in court with us.
“The Federal Government gave us the mandate to take over. Those hiding under the law to delay the debt recovery process will now circumvent those payments. The court cases for us are distractions, minor distractions and delay tactics. The question we often ask them is whether they borrowed this money or not. They say “Yes”. Have you paid? They say “no”. Then what is the issue? So, the court cases will always be there.
Industry sources have also raised concern on whether AMCON has the power to establish an airline.
But the official said, “The challenge people do not completely understand is that the amended AMCON Act which the President signed into law last year gave us some powers that you can describe as unimaginable but those are the realistic ways of recovering this money.
“That is what happened in Malaysia. In Malaysia, the government took it to a level that if you are a driver of a big man who is a debtor, you are not sure that that driver would not kill you because the driver believes that it is because of you that his country is not developing. It becomes a national crusade and that is why they recorded the successes. Those court cases will come but we are also waiting for them.
“Those powers are there in the Act because of these delay tactics. That is why the National Assembly went back to redraft the Act, amended it and gave AMCON these additional powers to trace the assets of anybody anywhere in the world. The Economic and Financial Crimes Commission, police, Independent Corrupt Practices and other Related Offences Commission will join and we will trace the asset without recourse to anybody.”
Asked whether Nigerian Eagle may own up to 10 planes at inception, an AMCON official said, “It may even be more.”
Meanwhile, it was gathered that about two aircraft belonging to Arik Air had been repainted in the livery of Nigerian Eagle. The two planes, it was learnt, were being painted in Ethiopia.
On claims that the immediate past Chief Executive Officer of Aero Contractors, Ado Sanusi, resigned from Aero to head AMCON’s airline, the source said the claim was true.
The Aviation ministry official said, “Capt. Ado may be appointed to head the new airline by AMCON. His appointment in Aero was done by AMCON. AMCON has every right to send him to any place they want. He is their employee.”
On what would happen to Arik and Aero when the new carrier eventually emerges, the ministry official replied, “The owners will take back what remains of their airlines.”
Asked to state the role of the Ministry of Aviation in the proposed airline by AMCON, the ministry’s Director, Public Relations, James Odaudu, replied, “I’m not aware of the ministry’s involvement.”
Industry sources however said the Aviation ministry would not be involved in the new airline, noting that AMCON would basically deal with the NCAA on the matter.
“Aviation ministry does not have a hand in AMCON. They have no business with AMCON,” another Aviation ministry official who is familiar with the matter, said.
“AMCON does not have to deal with the ministry but with the NCAA. The NCAA is the regulator and so AMCON will just apply. It is when the corporation wants to import aircraft that it will apply for ministerial approval.
“Aside from that, it does not have to seek anything else from the ministry. After all, AMCON has been involved in maritime, hotels, etc,” he added.
When contacted, the spokesperson for AMCON, Jude Nwauzor, confirmed that the corporation was floating an airline.
He declined to give further details, adding that the carrier would issue a statement on the matter very soon.
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