AMCON Owed N190bn By Five Domestic Airlines

Five Nigerian airlines owes the Asset Management Corporation of Nigeria (AMCON) a total sum of N190 billion, the Ministry of Aviation has said.

According to the ministry, the sum excludes other debts owed by the airlines to aviation agencies like the Federal Airports Authority of Nigeria (FAAN), the Nigerian Airspace Management Agency (NAMA), suppliers and other institutions.

The ministry arrived at this figure after carrying out the domestic airlines’ audit.

According to the debt profile of the airlines, Aero Contractors, which AMCON has taken over 60 per cent of its equity, owes $200 million (N34 billion); Arik Air, $600 (N102 billion); IRS Airlines, $55 million (N9.4 billion); Chanchangi Airlines, $55 million (N9.4 billion); and Air Nigeria, $225.806 million (N35 billion) as intervention fund collected by the management of the airline which has been declared bankrupt and stopped operations.

The Federal Ministry of Aviation said in the audit report that in its role as a referee and the enabler of a conducive business operating environment, it would encourage more private sector investment into the industry “but in order to attract credible investors both locally and internationally, the true state of the debts of the domestic airlines must be revealed.”

Reports however say only Aero Contractors has gone public with their financial woes.

Arik Air, in reaction to the debt ascribed to it, said it was not a true reflection of its debt profile, arguing that the figure being bandied by FAAN and the Ministry of Aviation is bogus, adding that the debt it owed is diminished by the debt FAAN owed it.

Deputy Managing Director and Head of Flight Operation of Arik, Captain Ado Sanusi, said a few years ago, the airline’s aircraft was damaged at the Calabar Airport when a cab drove airside and hit the belly of the Boeing B737-700 aircraft, which cost the airline over N1 billion to repair.

Sanusi also said while the airline pays passengers’ service charge to FAAN, it still uses its buses to commute passengers from the terminal to its aircraft to board flights.

He further argued that the total debt owed by Arik was less than 10 per cent of the total assets of the airline put at over N800 billion with the latest aircraft acquisitions.

Industry consultant and CEO of Belujane Konsult, Chris Aligbe also said the so called intervention fund from the federal government to the airlines was actually meant to shield banks, so it was never deployed to the airlines for the acquisition of aircraft and other operational equipment.

Aligbe said to make the aviation sector profitable and sustainable in Nigeria, the federal government would have to designate the airline subsector with an infant industry status and provide them protection, reliefs and incentives.

“Nigerian airlines are suffering from congenital infantilism which means that they will never grow under the present environment and policies because they seem to be in a perpetual state of infancy,” Aligbe said.

He canvassed that for the airlines to grow, government has to introduce incentives, which should include debt forgiveness.

“They should also remove the taxes being paid to these agencies like VAT, landing and parking and aerodrome charges. And government can no longer shy away from doing something about cost of aviation fuel, which is taking a toll on the operational cost of airlines.

“The deregulation of aviation fuel should be reversed because you do not regulate to hurt your economy,” Aligbe said.


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