Arik, AMCON endless messy tango

The question on the lips of many who have followed the Arik Air saga is how long will this drama continue to play out? WOLE SHADARE examines various positions of the feuding parties

Ominous sign

It is becoming very clear that Arik Air may be liquidated by the time the Assets Management Corporation of Nigeria (AMCON) vacates all the litigations instituted by the airline’s founder, Mr. Johnson Arumemi-Ikhide. It seems as the only option left to mitigate its losses of having to pump money into what looks like a drain pipe.

The carrier, once Nigeria’s pride has continued to be enmeshed in both internal and external crises. The crisis has festered for so long and there seems to be no solution in sight on how to resolve it; an action that has a huge ramification on the existence of once an airline that showed promise to replace the liquidated Nigeria Airways that was mindlessly ‘killed’ by the Olusegun Obasanjo administration in 2003.

Rapid descent

Arik at its inception was seen as a model for the airline business in the country. The carrier operated brand new aircraft which was the first after Nigeria Airways. It opened so many routes in West Africa, Africa, North America, the Middle East, and London to be specific.

Many organizations in and outside Nigeria recommended the airline to their workers; it soon became the airline of choice among many Nigerians.

There’s no denying the fact that the carrier operated under huge debts and other influences. It found it extremely difficult to operate its London, Johannesburg, and New York routes. Even domestic operations began to suffer due to debts owed to oil marketers, caterers, and other vendors.

Both AMCON, the shareholders of the carrier and the founder of the airline, Arumemi-Ikhide have been on each other’s neck trying to justify why and the reasons the carrier should never have been taken over by the debt recovery agency.

Arumemi-Ikhide is throwing everything at his disposal to reclaim his airline but he needs to enact all the tricks and creativity in the world to make that possible; at least for now.

Founder, shareholders battle on

As a first step, John-Ikhide had on May 18, 2022, written a letter to AMCON seeking to recover his airline taken over from him over huge debts

Recall that AMCON, a special debt recovery vehicle of the Federal Government, has been having a running battle operating Arik Air it was placed under receivership in February 2017.

One of the shareholders of the airline, Godwin Aideloje accused AMCON of wanton destruction of 14 new generation aircraft and other Arik assets by AMCON and its agents.

The claim of stabilisation of Arik Air by AMCON according to Aideloje is an insult to the travelling public.

Dwindling fortune

He noted that the downturn and dwindling fortunes of the airline are visibly displayed for the world to see, both in the airline operations under receivership and at the Arik Hangar, “where 14 cannibalised and destroyed aircraft are on display”.

He further alleged that Arik under shareholders management operated an average of 120 flights daily with a route network traversing the whole of Nigeria, all west and central Africa’s major airports including Angola and Johannesburg.

“As well as London and New York with about 22 aircraft,  but today, under AMCON, it only operates about 25 flights daily with 3 aircraft out of the 19 that AMCON inherited from the shareholders at take-over. Indeed, what a display of expertise by AMCON’s standard”.

AMCON defends self

But AMCON has continued to defend its take-over of the carrier saying its intervention was part of measures to “save” the airline from “imminent collapse”. Seven years down the line, it was learnt that Arik remains a hard sell.

The litigation by the shareholders and the founder of the carrier has not helped to solve the lingering issues as they are left with no option but to recover the remnant of their airline which they alleged its assets had been stripped.

The AMCON at a press briefing last week Friday restated its resolve to recover the over N227.6 billion it claimed the airline was owing it before the airline can be returned to the shareholders, stressing that it was unmoved or intimidated by the debtor’s alleged sponsored media attacks and resistance to paying the N227,637,469,394.34 billion owed by Arik Air.

Putting the record straight, spokesman for AMCON, Jude Nwauzor disclosed that the firm needed to correct some misinformation about the operations of the airline since it took over on February 9, 2017, adding that the agency had been injecting money into Arik Air in the last eight years.

Giving details of AMCON’s involvement in the airline, Nwauzor said Arik Air owes AMCON the sum of N227,637,469,394.34 billion combined with the total debts owed AMCON by Joseph Arumemi-Ikhide’s other companies, which include Rockson Engineering – N163,502, 837, 397.75 billion and Ojemai Farms – N14, 031, 457, 980.71 billion, the total debts rose to N455, 171, 764, 772.80 billion at the end of December, 2024.

“The task of debt recovery has been arduous and challenging. While several thousands of Nigerians and Nigerian companies have honoured their obligations, AMCON continues to face resistance from several debtors who are unwilling to pay without a fight. One of these debtors is Arik Air Limited (in Receivership), an airline company owned by Sir Johnson Arumemi-Ikhide, who is also the promoter of Rockson Nigeria Limited (a power infrastructure company), Ojemai Farms Limited, and Ojemai Investment Limited.

“The task of debt recovery has been arduous and challenging. While several thousands of Nigerians and Nigerian companies have honoured their obligations, AMCON continues to face resistance from several debtors who are unwilling to pay without a fight. One of these debtors is Arik Air Limited (in Receivership), an airline company owned by Sir Johnson Arumemi-Ikhide, who is also the promoter of Rockson Nigeria Limited (a power infrastructure company), Ojeimai Farms Limited, and Ojemai Investment Limited. These companies’ debts were transferred by various banks to AMCON due to their non-performance, with a total indebtedness of N455,171,764,772.80 billion as of December 31, 2024.

“Arik owes AMCON N227,637,469,394.34 billion; Rockson Engineering N163,502, 837, 397.75billion and Ojemai Farms N14, 031, 457, 980.71 billion. The fact of the matter is that no matter the smear campaign he is sponsoring against AMCON, these debts must be recovered one way or the other.”

“These companies’ debts were transferred by various banks to AMCON due to their non-performance, with a total indebtedness of N455, 171, 764, 772.80 billion as of December 31, 2024. Arik owes AMCON N227,637,469,394.34 billion; Rockson Engineering N163,502, 837, 397.75 billion and Ojemai Farms N14, 031, 457, 980.71 billion,” he said.

He said AMCON’s mandate was of national importance, but, “if at sunset AMCON is unable to recover the huge debt of over N4 trillion, it becomes the debt of the federal government of Nigeria for which taxpayers’ monies will be used to settle. The implication is that the general public will be made to pay for the recklessness of only a few individuals who continue to take advantage of the loopholes in our laws to escape their moral and legal obligations to repay their debts.”

Nwauzor said amongst several inaccurate claims, the founder of Arik, Arumemi-Ikhide, “has consistently peddled a false narrative regarding his debt to AMCON, claiming that Arik never defaulted in its payment obligations to Union Bank and feigning ignorance of the debt owed to AMCON. He has also alleged that the receivership was premature and claimed his loan was performing.

“During this period, Arik’s operations were severely compromised. Between November 2016 and January 2017, Arik faced numerous challenges, including the cancellation of flights, the inability to fulfil ticketed obligations, and a suspension of operations due to failure to pay for insurance. The airline was also engaged in protracted disputes with NCAA, FAAN, and NAMA, with combined claims of about ₦30 billion.

“Additionally,  PwC Nigeria, the company’s long-standing auditors (previously appointed by Sir Johnson Arumemi-Ikhide), conducted audits for the years 2015 and 2016. These audits confirmed that Arik had been technically insolvent since 2014, with its liabilities exceeding its assets throughout 2015 and 2016, up until the commencement of the receivership in 2017. As of December 2016, Arik’s negative shareholder capital stood at ₦139 billion, nearly equivalent to its debt to AMCON.”

Last line

It is a case of who blinks first in a matter that has dragged on for too long while the delay in resolving the imbroglio takes a toll on the airline that has remained a shadow of its former self. While Arik Air’s founder wants his airline, AMCON is simply saying pay up your toxic debts amounting to over N227 billion and have your airline.

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