Over trading, bane of Nigerian airlines-Arik MD

  • Plans Lagos-New York flight  resumption next year

Managing Director of Air Air, Captain Roy Ilegbodu has described over trading as one of the problems of Nigerian airlines that are driving them into extinction and by extension poor service delivery in the aviation industry.

The airline chief while receiving President, Institute of Chartered Accountants of Nigeria (ICAN), Alhaji Razak Jaiyeola and his executive visited him in his office in Lagos, yesterday said virtually all Nigerian carriers engage in over trading where they sell more than they can handle as a business.

Most times, they overbook flights, sell tickets more than they can handle or operate to many routes beyond their capacity and capability.

Many of Nigerian carriers might have an order backlog longer than a B777, but there is no fuel (money) to fund the orders and you are, figuratively, stuck on the ramp.

This situation contributed to some of the problems of the airline, leading to flight delays, cancellations and poor customer service.

 

Not satisfied with the local market, the airline ventured unto international routes like New York, Johannesburg and London when it was obvious it had more than it could chew; thereby leading to quick exit from the routes.

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The airline left huge debts in London, Johannesburg and New York. Its leased airplanes were re-possed when it was obvious it could not meet its financial obligation to lessors and service providers.

The same situation is happening to Nigeria’s leading airline (Name withheld) as it is engaging in over trading, leading to cancelled, delayed flights and poor services on many of the routes it operates.

He however stated that Arik had learned its lessons before the Federal Government through the Asset Management Corporation of Nigeria (AMCON) waded in to ensure that the carrier did not go under.

His words, “I must tell you that we have learnt our lessons. We have had our difficult period. We thank God that we have stabilised. We all knew what we went through from the former management of Arik before AMCON’s intervention.

The quick intervention of the two airlines helped to save over 3,000 jobs and the dearth of more aviation professionals. The two airlines are today still in operation, under receivership.

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 AMCON took over the management of Arik in February 2017 following a huge debt profile to AMCON and other creditors around the globe, a development in the aviation industry that saved the collapse of yet another airline as well as thousands of jobs in the country.

Arik before it was taken over by AMCON was in a precarious situation largely attributable to its heavy financial debt burden, bad corporate governance, erratic operational challenges and other issues, that required immediate intervention in order to guarantee the continued survival of the Airline.

Ilegbodu disclosed that Arik plans to return to New York route next year, but admitted that the idea is not that simple.

“We plan to return to New York route next year. It will take us a year or 18 months to return to New York. It will surely happen. The past management left a lot of debts internationally and that is what we plan to do before we return on the international routes”.

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“A lot of Nigerian airlines do over trading, that is why they run into trouble. We have actually learnt our lessons.”,he added.

Arik had suspended all its international routes shortly before the AMCON take-over and concentrated on consolidating on its domestic operations.

In his remark, Jaiyeola lauded Arik for its resolve to bounce back from a difficult past, adding that was one of the reason ICAN was partnering with the carrier that has a huge number of chartered accountants in the airline than any other airline in the country.

He noted that without a new Arik, the country’s aviation industry would be in the woods.

He thanked Ilegbodu for engaging members of ICAN in their employment and pleaded with him to engage many more of them.

Wole Shadare