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Airlines seek fresh lifeline from AMCON

By on June 11, 2015

Ailing and debt-ridden domestic airlines are seeking fresh lifeline running into billions of naira from the Asset Management Corporation of Nigeria, it has been learnt.

This is aside the over N130bn that six domestic airlines are currently owing the bad debt manager, which was created to absorb non-performing loans of banks after the 2009 banking sector crisis.

The latest request is also coming on the back of the working capital reportedly running into several billions of naira that AMCON had given to the domestic airlines so far.

Documents sighted by our correspondent showed that a number of the domestic carriers had written to AMCON, seeking a lifeline to enable them to pay aviation fuel bills, which had accumulated to billions of naira.

In the letters written to AMCON, the airlines listed the names of the oil marketing companies they owed and the respective amounts.

The carriers said it had become unbearable for them to continue operating without paying the outstanding bills. Hence, the need for the lifeline from AMCON.

The Managing Director, AMCON, Mr. Mustafa Chike-Obi, confirmed that the airlines had written to the corporation seeking for assistance but declined to give details.

Chike-Obi, in a terse message to our correspondent, said it was unlikely that the agency would accede to the request.

He did not give details of the reason the bad debt manager might deny the airlines the lifeline.

The AMCON boss had some months ago said the agency might not hesitate to assist airlines and other companies owing it if the assistance would help them to pay the debts.

Among the domestic airlines currently owing AMCON are Aerocontractors, Arik Air, Air Nigeria, Chanchangi Airlines and IRS Airlines.

Already, AMCON has converted some of the debts owed by Aerocontractors into a significant equity stake.

The Chairman, Airlines Operators of Nigeria, the umbrella body of all the domestic carriers operating in the country, Captain Nogie Meggison, declined to comment on the development. He said he chose not to comment on the matter for reasons best known to him.

But a top airline operator condemned the concerned airlines’ action. He said it was wrong for airlines to start seeking for a fresh lifeline from AMCON when they were already owing debts running into billions of naira.

The former General Secretary, AON, Alhaji Muhammed Tukur, said it was wrong for the airlines to look up to AMCON for another intervention.

He said it was understandable that AMCON had taken over the debt airlines owed banks but it was a sign of bad management on the part of airlines which were seeking such a fresh lifeline.

Tukur said, “It is understandable that AMCON has taken over the multibillion naira debts that the airlines are owing the banks. But for the airlines to be asking AMCON to come and assist them to pay fuel marketers their aviation fuel bills is bad.

“The Nigerian Civil Aviation Authority needs to investigate such airlines because they appear not to be doing fine and very soon, such airlines will start cutting corners in the areas of aircraft maintenance and other critical safety areas.”

An industry analyst and Head, Research and Statistics, Zenith Travels, Mr. Olumide Ohunayo, described the request as ridiculous and wrong.

He said, “Well, I am a bit confused here; these individually owned airlines owe the aviation agencies. Already, the airlines have duty waiver on aircraft spare parts and collected loans from banks collectively owned by Nigerians. They have also collected loan facilities granted by the Central Bank of Nigeria.

“They are the architect of their problem and they better look inwards first at themselves before rushing out again for another round of subsidies. Is it not better to have a national carrier draining the public purse than private carriers draining it by proxy? The airlines should be the cartel and not the fuel marketers. But lack of cooperation and consolidation among the airlines is the main cause of the current problems.”

 

[Punch]