Arik Airlines Struggling With Debt

Nigeria's largest airline has been placed in receivership and is in danger of folding, according to asset management firm AMCON.

Arik Air has been unable to pay workers and creditors, prompting the move, according to a report appearing in The Africa Report. In a statement, AMCON said that the airline " has been in a precarious situation largely attributable to its heavy financial debt burden, bad corporate governance ... that required immediate intervention."

A central bank document from 2012 when that the airline owed some $279 million to AMCON, which was established by the state to stave off a financial crisis. AMCON has assumed a large amount of debt from a dozen Nigerian airlines since its establishment in 2010.

Arik, which began operations 10 years ago, is now Africa's largest carrier in terms of passenger load. "Lately, Arik has been embattled with confiscation of its aircrafts due to non-payment of leases, flight delays, constant fracas between Arik workers and irate passengers and endless wait by passengers at both local and international airports," the AMCON statement continued. "In fact, the airline cannot meet its financial obligation, which is really dangerous from the point of view of safety. As a result of this barrage of problems, thousands of passengers that were returning from the last yuletide holiday period were left stranded for days at the different routes from where they were to board Arik to their destinations. As a matter of fact, the situation was even worsened by the fact that Arik happens to be the only airline that flies to some destinations in the country."

AMCON said that Arik has temporarily suspended service to New York, and has grounded more than eight other aircraft. The asset management company has appointed a new management team for the airline, supervised by a receivership manager.

(Image from file)

FMI: http://amcon.com.ng