The Managing Director and Chief Executive Officer of the Asset Management Corporation of Nigeria (AMCON), Ahmed Kuru, has called on the Nigerian government to convert Arik air into a national carrier.
Mr Kuru said his agency has retrieved Arik from the brink of collapse and restructured and positioned it on the path of growth and profitability. He said the National Assembly should, therefore, ensure that the government leverages on the potential of the airline as a stepping stone towards setting up a national carrier rather than trying to set up a new airline brand from the scratch.
The AMCON boss noted that a new airline will cost the federal government a fortune, especially in the face of the nation’s tight budget. A statement by AMCON spokesperson, Jude Nwauzor, said Mr Kuru made the call in Abuja on Monday when he appeared before the Senate Committee on Banking, Insurance and other Financial Institutions led by Uba Sani, Chairman of the Committee and Orji Kalu, the Chief Whip of the Senate and Deputy Chairman of the committee. Given the strategic and critical role the aviation sector plays in the development of the economy of any nation, Mr Kuru also called on the 9th National Assembly to reform the sector, which would help local airlines grow and attract many other investors that are eying Nigeria’s huge aviation business opportunity.
Mr Kuru said such reform will enable airlines such as Arik remain in business for years to come. AMCON took over Arik Air in February 2017 and the airline was subsequently placed in receivership, following its inability to repay debts in excess of N300 billion to AMCON and other creditors in Nigeria and around the world. In his presentation Monday, the AMCON chief executive recalled how respite came the way of Arik which was immersed in heavy financial debt burden that threatened to permanently ground the airline when AMCON took over and restructured its operations. He said prior to AMCON intervention, the airline, which carried about 55 per cent of the domestic air passengers in the country, went through difficult times that were attributable to its bad corporate governance, erratic operational challenges, inability to pay staff salaries and heavy debt burden among other issues. He said these led to the intervention.
If AMCON did not step in at the time it did, he noted, Arik would have gone under like many before it. Mr Kuru noted that with the right support and investment, Arik has all that it takes to become a massive airline given the volume of reformative work AMCON did upon intervention in 2017. But to do that, Mr Kuru said the National Assembly owes it a duty to reform the aviation sector by reducing the different layers of charges by different agencies, which makes it extremely difficult for airlines to survive in the country. “Arik has enough aircraft and facilities that can be used to set up a new airline,” he said.
“Even if the government wants to set up a national carrier to service just the domestic market, which currently has a lot of gap, it is possible with what Arik currently has. Today if you want to travel to Lagos from Abuja and you did not book your ticket two or three days earlier, the chances are that you may not get a seat, which tells us that there is a serious gap. To address the gap means that operators such as Slok Airlines and the likes may have to come back to Nigeria air space. But for them to come back, there needs to be a lot of aviation reforms, so that it will be attractive. “There is something the National Assembly should do to help the aviation industry. Why is it that there is no airline in Nigeria that has successfully existed for 10 years? We have successful businessmen in Nigeria, which tells you that what is happening in the aviation sector is a structural problem that needs to be addressed and I think the National Assembly has a role to play there.”
The AMCON boss added that aviation in Nigeria is a business that lacks good corporate governance. It is usually a one-man show and such business structure has all sorts of management challenges, he explained. “But having said that, the current state of the sector is not helping the operators, for instance the fees and charges they pay to different agencies regulators are too high. There are quite a lot of issues that I think when we sit down to address, we should be able to help the industry because it is very strategic to the development of the economy of Nigeria,” he stated.
Mr Sani on his part said that the management of AMCON was invited to provide the committee with an in-depth and holistic understanding of operations and activities of AMCON. He said AMCON and its operations are critical to the stabilisation of the Nigerian financial sector. According to him, AMCON within the period of its establishment, has indeed stabilised the financial industry with its action and has provided succour to financial lending institutions in the country when it acquired majority of the non-performing loans of Deposit Money Banks (DMBs) in the country. Declaring that the heavy debt burden of AMCON has become a burden to the federal government, which is no longer unacceptable, Mr Sani disclosed that the 9th Senate is ready and has resolved to render its support to ensure that AMCON’s primary focus of revitalising and stabilising the nation’s economy are realised within reasonable time frame. He said the committee will deepen its collaboration with AMCON to enable the corporation to recover all government assets both physically and financially and return same to the federal government.