The takeover of Arik Air by Assets Management Company of Nigeria (AMCON) has continued to generate controversy with allegations of sharp practices, huge debt overhang and cannibalisation of aircraft parts to provide spares for Aero, reports IME AKPAN
The takeover of the management of Arik Air by Asset Management Corporation of Nigeria (AMCON) took a different twist recently when the Corporation alleged that the former management of the airline was gambling with the lives of millions of people that patronized it because it did not care about safety.
Specifically, AMCON alleged that the airline operated without spare tyres and other important equipment necessary to facilitate operations. “Critical operational arrangement such as simulator which would have ensured that Arik pilots undertook mandatory trainings as required to improve their efficiency were nonexistent,” alleged AMCON adding that had it not taken over the management of the airline “there is no way the carrier could have remained profitable.”
Besides, the airline’s receiver manager, Mr. Oluseye Opasanya said the airline was indebted to the tune of N375 billion in local debts, including foreign debts totalling 31 million euros and $6.5 million.
In a 22-paragraph affidavit deposed to at the Federal High Court, Lagos, Opasanya said in the course of the receivership, AMCON had received diverse claims from financial institutions, service providers, suppliers, airport and aviation authorities, insurance providers, governmental agencies, employees, pilots and many others in excess of N300 billion, allegedly owed by the former management.
“As a matter of fact, the salaries of the expatriate and local staff of Arik Air were unpaid since October 2016 and July 2016 respectively,” he said. A breakdown of the debts showed that the former shareholders of Arik Air owe various creditors huge sums of money in services rendered and loans obtained at one time or the other.
Among those being owed are the Federal Airports Authority of Nigeria (FAAN) with a claim of N11.2 billion; unremitted pension fund of N4.5 billion; insurance premium, N418.8 million; N337.5 million claim from Pan African Capital Limited for fi nancial advisory services allegedly rendered to the former management; and N277.4 million being judgement debt allegedly due to the Nigerian Aviation Handling Company (nacho aviance); N203.8 million claims for aviation insurance cover; N60.7 million claim from Babington Ashaye and Co for tax consulting services; N40.1 million claim from Wakanow.com for alleged incentive payout; N22.2 million being alleged refund settlement for unused tickets to some 275 passengers; N19.08 million being owed 21st Century Technologies Limited.
Others are N6.1 million for alleged tax liability to the Kwara State Government; $30,000,000.00 being alleged outstanding indebtedness due to Sky Enterprises LLC; $2,500,000.00 judgment sum alleged to have been awarded in favour of Prince Arthur Eze and Atlas Petroleum Limited in Appeal Number CA/L/378/2016; $2,500,000.00 being a claim by Ike, Ike & Associates on behalf of Prince Arthur Eze in respect of a loan alleged to have been advanced to the airline; $942,147.02 being monies allegedly due to the FAAN for services and use of FAAN’s facilities by the 1st Defendant; $479,036.92 from Bird & Bird LLP UK on behalf of their client, Airline Rotables Ltd, being claim allegedly due for services rendered and invoiced to the former airline’s management; $140,610.21 being balance of payment allegedly due to Pratt & Whitney Engine Leasing LLC in respect of the lease agreement for the provision of PW 4168A –1D engine support to Arik plus accrued interest in the sum of $37,975.10; and $26,556.37 being alleged outstanding payments to World Fuel Services Inc.
Th e receiver manager also disclosed in the affi davit that AMCON had injected N1.5 billion into Arik since its intervention in February. Despite the huge amount, AMCON said the airline still incurred a loss of over N1 billion as a result of critical expenditure made to sustain its (airline’s) operations. However, the old management has fought back to get its airline as its directors and shareholders fi led a suit challenging AMCON takeover of the airline. In suit number FHC/L/CS//2017, fi led on March 27, the shareholders prayed the court to hold AMCON and NCAA responsible if there is any case of air accident or other serious damages in the airline’s operation.
Th e plaintiff s including Joseph Arumemi-Ikhide, Michael ArumemiIkhide and Sangowawa Olubiyi, said AMCON had violated the country’s air traffi c laws which could result in air accidents. Th ey are seeking a declaration that the defendants would be personally liable for any Air crash arising from non-compliance with the NCAA Act and regulations including any claims for compensation and criminal liability arising there from.
“Arik Aircraft are not receiving adequate and scheduled maintenance as well as regular supply of proper spare parts. “Over 10 aircraft parked at the Arik Air hanger are not on a maintenance and storage program and thus the safety of passengers currently being ferried on board the aircraft cannot be guaranteed,” said the litigants.
While the matter is pending in court, AMCON has been accused of cannibalizing Arik Air aircraft, a Bombardier Dash 8Q400 aircraft to provide spare parts for Aero fl eet.
An old management staff who craved anonymity told Blueprint that an engine of the Bombardier marked 5N-BKV was removed and fi xed on aero aircraft. It was further learnt that it was the second engine of the aircraft that was removed in a lease agreement in which Aero would be paying Arik $25,000 a month until the engine was returned to Arik. “Th e agreement term that Aero agrees to pay $25,000 a month for the engine is exploitative and against the interest of Arik because in other parts of the world when this lease arrangement is done the airline pays for the engine per hour, pays for maintenance reserve for the engine. Th is was not done in the so-called lease between Arik and Aero,” said a source. Beside the engine, it was also gathered that some other parts were removed from the aircraft. “
You cannibalize Arik aircraft and give the parts to Aero. It is not only that engine that was taken away but other parts were taken away. Th e engine taken away is engine number two. “Since AMCON took over Aero fi ve years ago, its debts have increased and its fl eet depleted. Th ey talked about corporate governance but under that corporate governance Aero has not improved; rather its existence is being threatened.
“When AMCON took over Arik, the airline had 15 serviceable aircraft but AMCON claimed they were 10. Now, from that 10, Arik has four aircraft. Th e new management owes all fuel markers N450 million,” said the source. An offi cial of Aero who spoke anonymously acknowledged the engine lease saying the deal is a legal and an international practice. He said the airline could have leased the engine from any other airline in the world, but it decided to take that of Arik because the money being paid would remain in the country. Meanwhile, the Nigerian Civil Aviation Authority (NCAA) has dismissed AMCON’s claim that the airline’s old management was operating spare tyres and other important equipment necessary to facilitate its operations.
Th e spokesman for NCAA, Sam Adurogboye described AMCON’s allegation as “baseless” and “untrue.” Adurogboye stressed that no airline can operate in the country without spare tyres and other important equipment, adding that Arik had a technical partnership with Lufthansa Technik in that regard.
Meanwhile, the fi ght for the soul of Arik Air has shifted to the courtroom. Nigerians wait with bated breath for the court to adjudicate on the matter.
