in Air Transport

Nigeria to award management contract of Arik Air to Ethiopian

Posted 6 September 2017 · Add Comment

The Nigerian government is negotiating with Ethiopian Airlines to sign an aviation cooperation agreement that would enable it to award Arik Air's management to Ethiopian on management contractual basis.

Nigerian and Ethiopian officials are shuttling between Abuja and Addis Ababa to hammer out a deal on the aviation cooperation agreement. Godfrey Odudigbo, Minister Plenipotentiary, told African Aerospace that there is an going negotiation between the government of Nigeria and Ethiopian Airlines, Africa’s largest carrier, on ways that the later could manage Arik Air on management contract basis. Odudigbo said the aviation cooperation agreement would also allow Ethiopian Airlines to provide technical assistance to Nigeria in relaunching its national carrier.
Arik Air is the largest private airline in Nigeria that has been serving as a de-facto national carrier since Air Nigeria ceased operation in 2012. Last February, the government of Nigeria through the Asset Management Corporation of Nigeria (AMCON), took control of Arik Air after the airline failed to pay its employees and creditors for months and grounded most of its aircraft.
Early this year the Nigerian government asked the management of Ethiopian Airlines to take over Arik Air on management contract basis and to forge a partnership to re-establish its national airline. There is also a plan to transform Arik Air into a national carrier.
Odudigbo told African Aerospace that there is an on going negotiation between the government of Nigeria and the management of Ethiopian Airlines that the later could share its expertise and experience in the aviation sector. He noted that the governments of Nigeria and Ethiopia are having a Joint Commission Negotiation that would bolster their bilateral relations. “At that joint commission meeting, all bilateral agreements would be signed. That also includes the management contract of Arik Air.”
According to Odudigbo, the joint commission negotiation would be held in November in Abuja, Nigeria and the agreement will be signed then after. “We are hoping that the management contract of Arik Air will be signed in November after the joint commission negotiation held in Abuja. The government of Nigeria believes that Ethiopian Airlines is doing very well in the aviation industry. We want to learn from their experiences. If they manage Arik Air they could revive and expand the company in Nigeria,” he told African Aerospace.
The Nigerian government wants to turn Arik Air into a national carrier. “We want to make the airline more viable,” Odudigbo added.
Ethiopian Airlines Group CEO Tewolde Gebremariam confirmed that the Arik Air management contract negotiation with AMCON is progressing. Gebremariam told African Aerospace that his management team is holding discussions on detailed technical matters with the Nigerian officials. “Without going into details I can say that the negotiation is progressing very well.”
Gebremariam noted that there is the possibility that Ethiopian could discuss equity investment in the future but currently it is only management contract that is under discussion.
One-time flag carrier Air Nigeria ceased operation in 2012 due to financial difficulties, leaving Africa’s largest economy without a national airline. Ten years earlier Nigeria Airways liquidated and Virgin Nigeria, a joint venture between the government of Nigeria and Virgin Atlantic, had also collapsed.
Arik Air has also suffered from financial difficulties and mounting debt. Established in 2006, Arik has been serving 26 domestic, regional and international destinations including Johannesburg, London and New York with 29 aircraft, mainly Boeings. The airline operates 60 percent of Nigeria’s domestic flights.
The founders of Arik furiously protested the government’s decision to take over the airline. In fact, the founder of Arik Air, Joseph Arumemi-Ikhide, warned that he would sue Ethiopian Airlines if it dares to take over the management of Arik Air.
Ethiopian Airlines is a big player in Nigeria, serving five destinations in Africa’s top oil producing country—namely Lagos, Abuja, Kano, Enugu and Kaduna—from its main hub in Addis Ababa. Ethiopian has been operating to Nigeria since 1960s. “The government of Nigeria trusts Ethiopian because it has been serving Nigeria since we became independent,” Odudigbo concluded.
 

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