Ahmed Kuru, managing director of Asset Management Corporation of Nigeria, AMCON, has said the organisation’s intervention in Arik Air and Aero Contractors were intended to be value adding and not destroy the airlines.
Speaking at the 6th Nigeria Transport Day Newspaper Awards and Lecture on Thursday April 26, in Lagos on “AMCON’s intervention in Transport and Allied Sector; Achievements, Challenges and Prospects,” Kuru noted that the Corporation has adopted a similar approach to the revitalization of Peugeot Automobile of Nigeria (PAN), which is back to operation and assembling vehicles for the road transport sector.
He observed that towards achieving their mandate, it purchased non-performing loans of about N181 billion from various banks, adding that over 90percent of this was in the aviation sector.
He explained that: “AMCON’s intervention through the instrumentality of Receiver Management was first to stabilize the operations of the airlines, put them in a position to generate positive cash flow, then resolve their debt situation through either the owners paying the debts or the sale of the companies/underlining assets”.
Kuru explained further that at the point of intervening in Arik, the company was witnessing high spate of flight cancellations of up to 40percent, on-time performance (OTP), which measures the promptness of schedule flights had fallen to as low as 15per cent while staff, including pilots were owed salaries, in some cases for up to six months.
In his words: “Staff morale was therefore understandably low. Several service providers including fuel marketers, maintenance and spare part companies were withdrawing services or were unwilling to extend credits. There were indeed significant concerns at various governmental cycles for safety and the possible impact of the collapse of the company on the economy.
“We are glad to report that this position has been largely arrested. Cancellations are down to 4percent, OTP is over 60percent, all owed salaries of current staff are fully paid, suppliers are now being paid as at when due. This of course has come at a cost to AMCON and not without the unparalleled support of the Central Bank of Nigeria and local banks.”
He added that at Aero, AMCON succeeded in ensuring that the airline remains a going concern.
Kuru stressed that with the strengthening of Aero management, the Corporation has seen a refocus on the strengths and capabilities of the airline.
The Maintenance Repair and Overhaul (MRO) licence has been made active. The airline in February succeeded in completing a c-check on a Boeing 737; a huge feat with a potential for savings in foreign exchange demands by local airlines, he said.
Kuru pointed out that their intervention in the sector has ensured that Nigerians are offered choices with an enhanced positive competition leading to improved service offering for the flying public.
He stated that as a major policy drive of this government, AMCON were able to save over 3,000 direct jobs, and hundreds of indirect jobs in the airline industry.
Kuru maintained that the new management in Arik had to take bold decisions to downsize its operations, especially cutting down all the long haul flights, due to the losses being sustained on those operations, and the lack of equity capital to absorb the losses.
Source: Business Day News