Finally, FG takes over distressed Arik Air, gives lifeline

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From all indications, respite may have come the way of Arik Airline who is currently immersed in heavy financial debt burden that is threatening to permanently ground the airline. For some time now, the airline, which carries about 55% of the load in the country, has been going through difficult times that are attributable to its bad corporate governance, erratic operational challenges, inability to pay staff salaries and heavy debt burden among other issues, which led to the call for authorities in the country to intervene before Arik goes under like many before it.

The federal government however has come to its aid and will now be managed by Roy Ukpebo Ilegbodu, an aviation expert, under the receivership of Oluseye Opasanya, a senior advocate of Nigeria (SAN).

Some of the issues that have affected Arik Air of late were confiscation of aircraft due to non-payment of leases, frequent flight delays, and constant fracas between its staff and aggrieved passengers.

On Tuesday, some passengers disrupted operations at its headquarters at the Lagos airport.

During the last yuletide season, passengers were stranded in airports all over the country due to Arik’s incessant flight delays and cancellations, which negatively affected the preference they enjoy from passengers.

“The airline is so overwhelmed to the extent that the worker’s wages are not paid for several months, leading to occasional confrontation between the management of Arik and different Aviation Unions in the country,” Asset Management Corporation of Nigeria (AMCON) said.

“It was Arik’s inability to pay its workers for seven months that forced the United Labour Congress (ULC) and Engineers Union to recently shut the offices of the Airline across the country causing untold hardship to thousands of travelers and an embarrassment to the aviation sector in the country.

“Besides owing workers’ salaries, the Airline has also not been remitting the taxes of workers to relevant bodies thus also defrauding the country. The airline is also in perpetual default in its lease payments and insurance premium, leading to regular and embarrassing repossession of its aircraft by Lessors. Various class actions are pending against the airline all over the world.”

AMCON said Arik, the largest local carrier, can now go back to regular and undisrupted operations to avoid job losses, protect investors and stakeholder funds. The decision to intervene clearly underscores the government’s commitment to instill sanity in the country’s aviation sector to prevent a major catastrophe.

Hadi Sirika, minister of state for aviation, expressed the belief that the development will bring about stability in the airline.

We believe that this appointment is timely and will stabilise the operations of the airline,” he said in a statement.

This will enhance the long term economic value of Arik Air and revitalize the airline’s ailing operations as well as sustain safety standards, in view of Arik Air’s pivotal role in the Nigerian aviation sector.”

Sirika also pledged that the ministry of aviation would support the new management of the airline and ensure that all necessary steps are taken to ensure that there would be no undue disruption on Arik’s regular business operations.

Recall that the Nigerian Civil Aviation Authority (NCAA) announced it has fined Arik Air N6m over its passengers’ complaints of delay and inability of the airline to ferry their luggage from London to Lagos from the 2nd, 3rd and 4th of December, 2016.

The NCAA has also directed the airline to pay affected passenger, the sum of $150 each as compensation for inconveniences suffered as a result of the delayed arrival of their luggage, within 30 days of the date of the letter.

 

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