The Asset Management Corporation of Nigeria, AMCON has reached an advanced stage towards launching a multibillion naira airline by pooling together its aviation assets especially planes in debt-ridden Arik Air and Aerocontactors Airlines.
The new international airline, to be named Nigeria Eagle, may take to the sky with at least 10 planes as early as June, according to insiders who spoke on condition of anonymity because they were not authorised to speak on the matter.
AMCON is expected to make an official statement on the deal very soon.
It was learnt that AMCON, a Federal Government-owned bad debt manager which owns controlling stakes in both Arik and Aero, chose to establish the new airline as a clever means of wriggling out of the multibillion naira liabilities currently hanging on the two carriers.
The debts are believed to be hindering new buyers from showing interest in the two carriers which AMCON has been willing to sell to new investors.
AMCON was established by the Federal Government in 2010 to buy over bad debts from commercial banks in order to save the banking system from imminent collapse. This followed the 2009 financial industry crisis in the country.
The bad debt manager has a mandate to recover bank loans from several companies whose bad debts had been bought over by AMCON.
AMCON took over the management of Arik and Aero some years back, following the two carriers’ inability to continue servicing their debts running into several billions of naira.
Unconfirmed reports said AMCON had made failed attempts to sell the two airlines apparently due to their huge liabilities and likely litigation from the original owners.
The latest move by AMCON to pool its assets especially planes in the two carriers is expected to help the bad debt manager to recover its investment in the two carriers ahead of its winding down in 2023.
A top AMCON official familiar with the deal said, “We are not trying to merge Arik and Aero. We are trying to strategically assemble all our aviation portfolios under one umbrella. The challenge of selling Aero is humongous. The challenge of Arik is even double. Our interest is not in the branding level, it is in our portfolio – the money we invested over the years to protect these airlines.
“The management gave us a strategy. The one we did with Bank of Industry. A lot of money was pumped into those airlines and that is why they are still standing till today. I am sure you heard when Ethiopian Airlines was rumoured to want to buy Arik.
“Why you hear of a debt profile of close to N300bn, it is very scary. If you assemble all your assets under a fresh umbrella, dealing with the thing will be easy. That is what management is trying to do. Even the idea of merging the two airlines is difficult. That is what is going on.”
According to aviation industry sources, AMCON has gone as far as 80 per cent of the steps it needs to take towards setting up the carrier.
A top official of AMCON also confirmed this, saying, “The launch date for the airline depends on a lot of variables. You know there are a lot of certifications you need to do before you begin to fly. We have gone far but cannot tell you how far we have gone now. But we have covered 80 to 90 per cent of the journey.”
Asked if the carrier could take to the sky before mid-year, the official said, “Most likely, but don’t say I said this. The management will put out a statement when this happens. I have not been to a meeting where we have a targeted time.”
Giving further insight on the proposed Nigerian Eagle, the official said, “Apart from Arik and Aero, we have other aviation assets. We have something with Dana and Afrijet; there are a couple of aviation assets we have scattered here and there. These are what we want to assemble under one umbrella
“It is not going to be a merger, it is like let us say you gave Company ‘A’ about 20 buses to start a transport business on the condition that at the end of every year, it pays you N1bn. Now you decide to collect the entire money and assets and give it to Company ‘B’ and ask it to run the business because it is more responsible than Company ‘A’. That is why I said it is not going to be a merger but a strategic realignment of the portfolios.”