Arik Air To Fight Government Takeover

February 9, 2017

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Nigerian carrier Arik Air’s management said they will challenge in court the takeover of the airline by the country’s state asset management body.

The Assets Management Company of Nigeria (AMCON) has taken control of the airline and installed a receiver “to instill sanity in the nation’s aviation sector.”

The Nigerian government said Arik was on the brink of collapse with debts of NGN300 billion naira (USD$9.5 million), much of which is owed to the government.

“Arik constantly defaults in its lease payments and insurance, resulting in the regular confiscation of aircraft by lessors,” the government said in a statement.

AMCON said Arik “has been in a precarious situation largely attributable to its heavy financial debt burden [and] bad corporate governance”, and requires immediate intervention to guarantee its survival.

AMCON took over Arik’s non-performing loans, running into tens of billions of naira, a few years ago, in exchange for a stake in the airline.

Arik currently has eight aircraft grounded for various reasons, causing cancellations and delays. A flight to New York JFK was temporarily suspended on Wednesday as two aircraft went in for maintenance at the same time.

The troubled airline will be managed by Captain Roy Ukpebo Ilegbodu, a veteran aviation expert, under the receiver Oluseye Opasanya.

The airline’s management said that, while complying with the court order for the AMCON takeover, they have the right to challenge it and will make their position public in a few days.

Arik Air is the biggest domestic carrier in Nigeria with a 55 percent market share.