The state-owned Asset Management Corporation of Nigeria (AMCON) intends to retain Arik Air alongside its new start-up NG Eagle, at least until the end of 2021, according to Arik Air Receiver Manager, Kamilu Omokide.
He told THISDAY newspaper that AMCON had concluded plans to wet-lease three more aircraft for Arik Air, which has been in receivership with AMCON since 2017. “Currently we are doing very well with operational expenses.” He added: “Arik does not plan to get out of business. It will operate side-by-side with NG Eagle for a while. We have been able to access wet-leases and we have been able to run them very professionally. We have a plan to bring three more planes with the support of AMCON on wet lease, ACMI.”
He continued: “We cannot pull all of our aircraft from Arik. Arik will be sustained throughout this year. Arik has a very big space at its headquarters that can take in four airlines on a good arrangement where costs can be shared. It has good workers who are experienced and we have been training staff since AMCON took over, something that was rare in the past. Our pilots are some of the best in the industry,” he added.
AMCON spokesperson Jude Nwauzor did not immediately respond to requests for comment.
Omokide said AMCON had injected NGN375 billion naira (USD916 million) into Arik Air since it took it over in 2017 to rescue the business. The airline at the time had defaulted on loan repayments to the Nigerian government.
He said when AMCON took over, many of the aircraft in the Arik fleet had been overseas on mandatory maintenance because the airline couldn’t afford to bring them back. Creditors were closing in on the airline, with flight cancellation as high as 40%, resulting in passengers mobbing the airline’s headquarters demanding refunds.
“So, the decision of AMCON to intervene was nationally imperative in order to save the airline because of the critical role it was playing; to stabilise the industry and, to rescue our funds.”
Omokide confirmed that former Arik Air aircraft had been moved to start-up NG Eagle. Two former Arik Air B737-700s, rebranded in NG Eagle livery at the Ethiopian Airlines MRO at Addis Ababa earlier this year, have been reported parked in the Arik Air hangar at Lagos last month.
NG Eagle was incorporated on July 11, 2019, with a share capital of NGN1 billion (USD2.5 million), of which AMCON holds NGN499.9 million (USD1.2 million), with the rest held by private investors.
The Nigerian Civil Aviation Authority previously confirmed to ch-aviation that NG Eagle was in Phase Three/Four of its AOC certification drive and had applied to use at least three B737NGs to operate domestic routes. Nigerian regulations require a minimum of three aircraft for a start.
Meanwhile, Omokide said AMCON would not be able to repair all of Arik’s aircraft. It planned to keep one of the company’s two A340-500s and convert it into a freighter. According to the ch-aviation fleets advanced module, Arik Air’s A340-500s were CS-TFW (msn 910), stored at Lagos, and CS-TFX (msn 912), stored at Lourdes/Tarbes. Omokide revealed the purchase of the A340-500s at USD280 million had been one of the major factors contributing to Arik Air’s bankruptcy.
“Acquisition of A340-500 at that whooping sum was a single most important error. Another of the mistakes was the zeal to commence international operations to London Heathrow, New York JFK, and Johannesburg O.R. Tambo. They could not charge fares that were comparable to what other major carriers charged on the routes. It was a strategic error. The aircraft (A340-500) was a killer. It could not generate enough revenue to offset its operational cost. That was due to a lack of corporate governance,” he said.
According to ch-aviation fleets advanced data, Airk Air’s fleet currently comprises five B737-700s, four B737-800, one CRJ1000ER, four CRJ900ERs, and one DHC-8-Q400.