Home » Aviation: AMCON’s CEO, Ahmed Kuru, Highlights Challenges and Resolution Efforts Regarding Arik Air Saga in Nigeria

Aviation: AMCON’s CEO, Ahmed Kuru, Highlights Challenges and Resolution Efforts Regarding Arik Air Saga in Nigeria

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In a recent interview, Mr. Ahmed Kuru, the Managing Director/Chief Executive Officer of the Asset Management Corporation of Nigeria (AMCON), addressed critical issues surrounding the Arik Air situation and the challenges faced in implementing their proposed exit strategy, the NG Eagle airline.

According to thisdaylive.com, Kuru shed light on the complexities and hurdles encountered in their efforts to restructure and manage Nigeria’s aviation assets, highlighting the impact of decisions made in the previous administration on these endeavors.

There has been so much talk around AMCON’s sunset date, when is that supposed to be?

AMCON by its creation has a sunset date and the sunset date is built around its funding model. We believe strongly at AMCON that once you address the funding model bit of it, AMCON has no role to play again. AMCON wasn’t created to be there perpetually. The earlier we finish, which is what everybody is working towards, the better. But we can’t just walk away like that. It is not like a door you will just close and go. There has to be a process. We have more than 2,000 cases, we have more than 6,000 obligors and you have outstanding. All these things need to be looked at and we are looking at it. So, one cannot say there is a specific date, but I can tell you that for the funding model, we have extended it beyond 2025. Our goal is to come up with a framework that we would have before that time, and it is possible. The Central Bank of Nigeria, the Ministry of Finance and National Assembly are on same page on this and it is something that we can figure out a framework within 30 days.

READ: Africa: Arik Air was in good health with over 3000 Staff and 20 airplanes before AMCON take over says Former Vice Chair

For us, we are a resolution agency and we are always willing to receive obligors that really needs to come and talk to us for resolution. We have thousands of cases and we have closed more than 4,000 cases of people that came to us and we sat down and resolved. There are so many obligations that we don’t believe can be closed in a day, but I believe we can sit down with Arik or anybody and have a resolution. But the person must have a mindset that you want to have a resolution. If your outstanding obligation is more than N240 billion and if you sit down with me and say you want to give only N5 billion or N10 billion, then there is an issue. But if you look at what makes sense given the current economic situation. A lot of them like to hear that AMCON is winding down, so they think they can walk away. But it doesn’t work like that because Nigerians would not accept it. It doesn’t work like that. There must be a framework. The government can decide to set up a taskforce; they may decide to go to the National Assembly to set up a law that addresses how to seize people’s assets. Some obligors even stopped picking our calls when they felt that AMCON was winding down. It never works like that. For me, even if they say they are winding down, it is better they come and talk to us.

What is the update on Arik Air because we have seen reports alleging that AMCON has mismanaged the airline?

So, we went into Arik Air in 2017. Particularly, when we came on board in 2015, we never went near Arik, because at that time, the airline was carrying more than 40 per cent of the passenger load. But by 2017, Arik Air had entered into a very big crisis. They were not paying salaries, they were not paying insurance, the technical partners had gone, the guys they brought from Ethiopia had packed their bags and were going, they had more than N32 billion to pay the regulators – Federal Airport Authority of Nigeria and the Nigeria Civil Aviation Authority. Everything was wrong with Arik. Some of us can recall. They were now delaying and cancelling flights for days. Sometimes, when you have an Arik ticket, you could be at the airport for two to three days. Then the international community started writing and they started arresting the Arik’s aircraft. Then British government wrote because they were not paying the commitments to the international airports. At that time, the federal government felt that AMCON needed to support Arik. If we had not entered Arik in 2017, Arik wouldn’t have latest two weeks. So, we were able to pump money into Arik to make sure that they continued to fly.

READ: Aviation: How Plan to Sell West African Airline Arik by vested Government interest failed

But you know, today, everybody in the aviation industry will tell you that the sector is challenged. It is not only Arik or Aero Contractors that are facing challenges. If you ask the operator of one of the biggest airlines today, who is the Chairman of Air Peace, if he tells you what he goes through in running the airline, you will give him national award for him to continue to fly up till today. Fundamentally, the problem with the industry is that you can’t pick one airline and say it has run successfully for 10 years. Nigerians are very dynamic people and in all spheres of life, you will find Nigerians that are doing well. But there is no airline that has ran successfully for 10 years. That tells you that fundamentally there are issues and these issues have to be addressed. I am very happy that the new minister has promised to look into some of these things. Recently, the association of pilots commended us for the fact that Arik is still flying because they know what we are going through. We just make sure that the airline continues to fly. But people try to judge you based on one. Unfortunately, the obligors are the ones that are going about feeding members of the public information that are fundamentally not correct. What we always say is that if there are facts, come to us. We are a government agency and we can only do things based on the law that created us.

There is the claim that AMCON inherited 30 aircraft in the fleet of Arik, which has been decimated to about three. How many aircraft are in operation right now?

The time we entered into Arik, there were about seven Aircraft on Ground. Aircraft on ground doesn’t mean it is flying, but it is on ground, which means if you fix one or two things, it will fly. However, at that time, based on the record that we had, Arik was supposed to have more than 30 aircraft. But some of them had been vandalised and others cannibalised. If you pass through Arik’s hanger, you will see so many aircraft parked and they looked so innocent as if you can start the engine and fly them out. But some of them don’t have engine and landing gears. It also became a challenge because most of the aircraft belong to lenders such as Afreximbank, Access Bank, Zenith, EDC of Canada. Some of them when they even tried to seize the aircraft, they realise that the body was for one bank and the engine was for another bank. Frankly speaking, the guy that set up Arik had a good idea because he wanted to have an international airline, but he got it wrong buying some aircraft that run into hundreds of million dollars. The aircraft are there, but it will shock you to know how much was paid for them. It’s a serious challenge and usually, we’ve seen it in Arik where someone decides to steal from himself. It’s a problem.

Let me make something clear. AMCON doesn’t get involved in businesses. It’s just unfortunate that we got caught up in this Arik saga and we didn’t go there by accident. The government of that day wanted a situation whereby Arik should be saved. Because based on the security report they had, Arik would not have lasted another one or two weeks and Arik was very fundamental to them. We had a meeting in the office of the former vice president, who was the acting president. And then the idea that Arik must be saved, you know, because of the prominence at that time. AMCON, at that time made it very clear that we don’t want anything to do with aviation. The minister of aviation was there. Captain Roy was headhunted from the industry and everybody that is in the aviation industry knows who Captain Roy is. Then, there was Captain Ado Sanusi. Even if you are running a private business, it can’t be better than that. These are some of the best guys in the industry. It’s not like AMCON went there and started riding the aircraft from the Tarmac. But the fact that the AMCON name is there, and it is having challenges. We hardly close down a running business, I can tell you. Hardly. Some of those businesses were already dead. AMCON cannot just go and see a thriving business and just lock it. It doesn’t happen like that. But something that is just hanging there by whiskers. Just touch it and it drops. Then they will say AMCON has come and they have closed our shop.

So, is there is no way of resolving the Arik Air debacle?

There is always a way out of every resolution. It is just a question of give and take. What is important is for us to sit down with the owner of Arik if he is ready and agree on what makes sense to him, to us and the government and then we go back to the CBN as well as the Ministry of Finance and share such resolution strategy with them. If you recall, in the past, we resolved issues that are more difficult and more complicated than the Arik issue in the banks, oil and gas, manufacturing sector, real estate and investment, automobile, telecommunications, just to mention a few. But for any resolution to take place, the two parties or the parties involved must have understanding. We are convinced that there is always a way out. In our resolution initiatives, we focus more on the business than even the recovery.

Sometimes we let go where we realise that the business will survive and the key benefit to that is that you will keep employment because there are more than 1,000 persons working at Arik and it is providing services in an industry that still has gaps. So, sometimes when you look at the feasibility of keeping the business going, it also makes you to give more concession. but the party on the other side must come with the mindset that they are ready for resolution. For Arik, we would continue to maintain, we have said it privately and we are saying it publicly, we are always ready for us to have a conversation. So many people have come to us and we have encouraged them to encourage the party on the other side to come and talk to us. At the end of the day, we have to come up with a strategy on how to move forward, because the current situation is not sustainable. Our prayer is that we have a resolution with the owners of the business, such a way that it would be a win-win situation for everybody.

NG Eagle was supposed to be an exit strategy on the Arik Air and Aero Contractors debacle, where are we on the proposed airline?

NG Eagle, if you recall, when we entered into Arik, the intention was to stabilise the business. Usually, when AMCON enters into any business, normally it is for recovery. But when we took over Arik, the intention was not for recovery, but to stabilise, because as at that time, government was interested that the airline must continue to fly. So, by the time we entered, we agreed that there must be an exit strategy. Beside the financial obligation hanging around Arik, which was in excess of N250 billion to N300 billion, there were other debtors. Arik had quite a lot of challenges, both locally and internationally. Some of those assets that were at Arik, actually didn’t belong to Arik, but they belong to banks and AMCON.

So we said why don’t we set up and independent airline and then move those assets into the new airline because those assets were not encumbered, and then that new airline would be disposed without any issues and there were quite a lot of investors who were interested in entering into the aviation space. We had meetings and started the process of setting up the NG Eagle airline. It took us almost two years to follow the process. At that time, the aviation ministry asked to see how they can help the process.

We had to get through the rigors of getting a licence and at the last point when we were just picking up the licence, the aviation industry come up to say we are planning to set up a national carrier. So, for reasons not known to us, we were frustrated. They reported us to the National Assembly and people started talking about past due obligations that were part of the original agreement. That was how we were frustrated. There were three aircraft that were branded, sitting on the tarmac and they sat on the tarmac for almost two years, which was very strange to us in AMCON.

We didn’t wake up overnight and decided to set up the airline. The aviation authorities were with us all through the process up to the point that we were to pick our licence. We got to a point where people started saying we wanted to do a national carrier. AMCON has no business setting up a national carrier; we are only interested in resolving debt issue. We were frustrated and we had to find a way of dealing with the licence because it was going to expire after a certain period if we didn’t use it. We therefore started a process to sell the licence and we were able to sell it to somebody who intends to continue flying. If the persons that bought it doesn’t meet the requirements of NCAA, unfortunately the licence may expire

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