The Asset Management Corporation of Nigeria (AMCON), an agency of the federal government is considering merging Arik Air and Aero Contractors to create a new national carrier.
This proposal was revealed by AMCON’s Managing Director/CEO, Gbenga Alade, during an interactive session with media executives in Lagos on Monday.
He said the idea is rooted in the financial difficulties faced by both airlines, which are heavily indebted and unable to meet their financial obligations.
“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 stated.
Arik and Aero Contractors are in dire financial straits, with Arik owing significant amounts to international creditors, including $52 million to Afreximbank.
Negotiations have been challenging, with Arik only willing to pay a fraction of its debt. Alade expressed deep concern over the situation, noting that the current status of the airlines has been causing him sleepless nights.
In 2016, AMCON took over the management of Aero Contractors due to its inability to manage its debts, and in 2017, it did the same with Arik Air.
Despite efforts to resolve the issues, including negotiating with creditors and attempting to keep the airlines operational, the financial burden remains substantial.
AMCON’s idea of merging the airlines into a national carrier comes in the wake of the controversial Nigeria Air project, which was suspended by the current Minister of Aviation, Festus Keyamo.
The project had faced significant criticism over its ownership structure, which heavily favoured Ethiopian Airlines.
The Federal High Court in Lagos recently nullified the sale of shares in Nigeria Air to Ethiopian Airlines, further complicating the national carrier initiative.
Alade emphasized that if the merger goes ahead, a new special purpose vehicle (SPV) would need to be created, as the previous one was sold.
According to him, the ultimate goal would be to stabilize the airlines, preserve jobs, and create a viable national carrier that is wholly Nigerian and beneficial to the country’s economy.
