in Business & Finance

Arik Air investment offer rejected by Ethiopian Airlines

Posted 28 February 2017 · Add Comment

Ethiopian Airlines has reportedly rejected an offer from the state-owned Asset Management Corporation of Nigeria (AMCON) to take over management of struggling Arik Air, reports ch-aviation.

AMCON recently took over Arik Air following mounting financial and operational issues, but has no interest in managing the airline in the long term.

Founder of Arik Air, Joseph Arumeni-Ikhide, was strongly opposed to the Nigerian airline being taken over by Ethiopian, saying that he would launch a legal challenge if it did so. Arumemi-Ikhide has also said that the financial information released by AMCON has grossly exaggerated Arik Air's debts.

Last week, AMCON managing director Ahmed Kuru addressed a Nigerian senate hearing, telling them that the airline had been a mere three weeks from ceasing operations before they stepped in, according to a report in The Nation. Kuru dismissed any suggestion that Arik Air could become Nigeria's national carrier, saying that the airline was "too problematic for the government to handle". He said that AMCON was prioritising the payment of staff salaries, some of which were more than seven months outstanding, and were on the lookout for suitable investors.

Kuru highlighted the importance of Arik Air to the Nigerian economy and stressed that it must continue flying, but added that international flights are likely to be suspended. "Arik Air needs about NGN1.6 billion (USD5 million) to buy fuel for international routes. We cannot do that right now. By the time we manage it for about six months and the airline can now survive, then we can sit down and talk about where to go from there." As previously reported, long-haul flights to London Heathrow, New York JFK and Johannesburg O.R. Tambo have already been suspended.

Despite the poor outlook, Kuru is optimistic that the airline can achieve stability and begin to repay its debts in the near future. "At the end of the day, we want to return it to profitability. We need to emphasise one fact – that the only way we can recover our debts is for Arik Airline to continue to fly."

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