SPECIAL INVESTIGATION: AMCON Triggers Fresh Trouble In Aviation Sector Over NG Eagle

ARIK AERO

…Arik Workers Risk Massive Job Loss

…Union Vows To Stop New Airline

BEVERLY HILLS, March 22, (THEWILL) – The crises sparked off by the emerging NG Eagle Airline being set up by the Asset Management Corporation of Nigeria (AMCON) are getting messier. Workers of Arik Air may lose their jobs enmasse even as their Union appears set to move against the new airline. ANTHONY OKECHUKWU reports.

Since last year (2020), efforts have been reinvigorated by many investors to join the domestic airline operation in the country. As it is, there are hosts of new airlines that are currently battling to get the Air Operators Certificates (AOC), to enable them start operations in Nigeria.

An AOC is the approval granted by the Civil Aviation Authority to an aircraft operator to allow it use its aircraft for commercial purposes. This requires the operator to have personnel, assets and system in place to ensure the safety of its employees and the general public.

Checks at the Nigerian Civil Aviation Authority (NCAA) show that some new entrants have shown interest in the ownership of airlines, just as others have reached various stages in the acquisition of their AOCs. Some of the airlines are NG Eagle, Green Africa Airways, Rano Air, Northeast Shuttle and a host of others which have expressed interest too but are still being considered.

While stakeholders have received the good news with enthusiasm, the emergence of NG Eagle is already causing a lot of ripples in Nigeria’s aviation industry. The alleged establishment of the NG Eagle by the Asset Management Corporation of Nigeria (AMCON), first started like a rumour, until last year when two Arik Air 737s were repainted in livery of NG Eagle.

The yet-to-take off new airline, NG Eagle, has, therefore, pitched the National Union of Air Transport Employees, NUATE, against the Management of Arik Air. The union is specifically seeking to know where the staff of Arik Air stands as the airline Management has commenced the deployment of assets and its personnel to the upcoming airline.

NGeagle

Recall that Arik Air has been in receivership due to its inability to pay workers and creditors, prompting the government to take over control of the airline. Before the takeover, Arik Air had been struggling with debt amid a currency crisis in Nigeria, as customers were invoiced in Naira but fuel suppliers and other overhead expenses were paid in Dollars.

As at 2012, a Central Bank of Nigeria (CBN) document showed that Arik owed 85 billion naira ($279 million) to AMCON – an establishment created by the Federal Government in 2010 to stem financial crises among deposit money banks. Since then, AMCON had taken over N132 billion debts from 12 Nigerian airlines, including Arik.

Ten years down the line, there are allegations that AMCON had gone ahead to float a fresh airline christened NG Eagle. AMCON’s new moves have equally elicited reactions from stakeholders who are querying why AMCON would be floating another airline when it is presently in receivership of two airlines – Arik Air and Aero Contractors, being a 60 per cent shareholder in the latter.

The stakeholders’ worry is that AMCON’s unstated objective is to open a window of business opportunity as a way to recoup its heavy financial losses through the heavy debts in Arik and Aero. According to them, AMCOM, after 10 years of existence, appears helpless to recover its outstanding debts, adding that the Corporation is expected to deliver by quickly recovering as much debt as possible.

In addition, these stakeholders are also afraid that AMCON’s real intention may not be unconnected with the quest to sidestep the debt overhang, particularly in Arik Air, while continuing to make money from the airline business without any real capital injection. But the key aviation union, Nigeria Union of Air Transport Employees (NUATE ) has vowed to stop AMCON from its plans of establishing the new airline.

Speaking on behalf of the union, General Secretary of NUATE, Comrade Ocheme Aba, told THEWILL that it is the most open secret at this time in aviation in Nigeria that the AMCON has chosen to float a new Airline known as NG Eagle.

Comrade Aba noted that NUATE considers this to be a very positive and welcome development as a new airline would normally create job opportunities, provide incentives for deeper business penetration and generally widen the Nigerian aviation horizon.

Although, Aba promised that all stakeholders, including NUATE must extend warm welcome to the NG Eagle when it finally unveils, he pointed out there are ominous signs that what should ordinarily be a lofty project will likely run into a heavy storm being created by a thoroughly fouled and convoluted industrial atmosphere at Arik Air.

He said: “We consider it most unfortunate that an odd combination of AMCON’s egoistic, evasive and self-defeating tendencies on the one hand, and Arik Air’s unrelenting penchant for courting crisis on the other hand, as well as overly demonstrated lack of capacity/disdain for labour relations practice have evoked a perplexing atmosphere of forlornness in the Airline. Under this atmosphere, it is practically impossible to be hopeful of any good thing; hence, our misgivings concerning NG Eagle.

“This, it intends to achieve, by moving all valuable assets of Arik Air, including human assets, into the new NG Eagle. The question is: what becomes of the carcass of Arik Air and its personnel after.”

Already, AMCON is said to have moved some personnel of Arik Air to NG Eagle while being loudly silent on the service records of such personnel in Arik Air.

In his reaction, CEO of Arik Air, Capt Roy Ilegbodu, said there is no connection between Arik Air and NG Eagle, insisting that NG Eagle is solely owned by AMCON while Arik Air itself is in receivership and the receivership was instituted by AMCON which is based on the fact that Arik owes AMCON substantially.

On Arik Air 737s that were repainted in livery of NG Eagle, Capt Ilegbodu said, “I can boldly say that, in our industry, those airplanes are what we call ‘recovery’. So, they have been recovered. If a company owes and it cannot pay, you recover the mortgaged asset. Those airplanes were actually mortgaged to AMCON and it is very clear that at some point they took their assets and that is what was done.”

Ilegbodu maintained that the fact that they carried the name and logo of Arik doesn’t mean they belong to Arik; the owners have taken their property. By law, those are mortgaged assets and the owners of the assets have every right to take their assets”, Ilegbodu said.

In his reaction, former Commandant of the Murtala Muhammed Airport, Group Capt John Ojikutu (rtd), said his position from inception of the receivership of Arik and others by AMCON was that AMCON or the relevant authorities should assess the local and foreign debts of the airlines in the receiverships; get credible foreign and local investors as well as technical partners to buy into the assets and debts and form a new airline.

According to Ojikutu, none of these were done but AMCON went on a long journey of wanting to recover over N300bn which he said he knew was not possible for it in 30 years.

“This is because given the manner the operations of the receivership was being conducted, it cannot make a net profit of N10 billion annually to be able to offset the N300 billion”, Ojikutu stated.

Ojikutu, who is also an Aviation Security Consultant, opined that the news of AMCON or any other authority setting up of NG Eagle Air from Arik Air may now amount to reverting to his earlier suggestions.

Explaining further, he said “which aircraft of the fleets are being organised into AMCON NG Eagle and which for AMCON Arik? Note the over 20 aircraft we knew once in the airline fleet have been depleted to less than half and that should be an area of concern to stakeholders. The recent news about a bad aircraft in one flight in the operations of the airline should be of concern too about what is going behind in the receivership and the management of the airline

In his views, former General Secretary of NUATE, Comrade Olayinka Abioye, noted that as at the time AMCON took over, things were a bit unstable.

Comrade Olayinka pointed out that questions that needed to be asked include: the genuineness of the intent and purposes of AMCON in the matter; how much was Arik owing; who are the institutions, groups or persons being owed; what role did the NCAA play in all these till date, and has AMCON opened its book to allay fears of unfairness, ulterior motives and underhand deals since it took over Arik? Another important question that needed an answer, according to Abioye is how much has AMCON injected into the airline since it took over?

Abioye said, “While setting up another airline has its advantages, so are pitfalls; but does AMCON have the power to set up an airline — by the Act setting it up? If not, then the exercise becomes ultra vires more so when existing employees are being coerced into becoming fresh employees of the new AMCON airline”.

Wondering what will happen to these employees’ past services in Arik, Abioye asked, “Will the number of years put in service be written off, or will it be continued in the new airline? Has all labour related matters been taken up and resolved amicably by all parties? What becomes of the fewer employees that will remain in the original Arik and what fate does the carcass of Arik have at the end of NG Eagle?”