Investors Are Showing Keen Interest In Arik – Opasanya, SAN

The Receiver Manager, Arik Air, Mr. Oluseye Opasanya, SAN, has responded to a malicious story published on the front page of Thisday newspaper on Tuesday, January 15, which falsely whipped up unnecessary sentiments designed to rubbish the good work the Asset Management Corporation of Nigeria (AMCON) has done since its intervention at the airline.

Opasanya’s statement emphatically called on the public to discountenance the story, which he described as misleading, full of outright and deliberate lies interspersed with half-truths. He said following the impressive performance of Arik Air in Receivership, in the last two years, local and foreign investors are showing keen interest in the airline.

The statement released in Lagos on Wednesday, which reassured the flying public that Arik in receivership is operationally sound, professionally run and safe and will continue to be a major and dominant carrier in the aviation industry reads in parts, “…Our attention has been drawn to a story on the front page of Tuesday, January 15, 2019 edition of Thisday titled: “Two years After, AMCON Yet to Get Buyer for Arik”. The story is in many respects, misleading, full of outright and deliberate lies interspersed with half-truths. It is apparent that the reporter failed in his journalistic ethos by making false claims. The facts are available and we believe with a bit of diligence the reporter would have discovered the truth. We make bold to say that the write up is biased and should rightly have been a paid advertorial of vested interests.”

Explaining the position of events at Arik, Opasanya reiterated the fact that the appointment of a Receiver Manager (RM) [and new management team] by the Asset Management Corporation of Nigeria (AMCON) on February 9, 2017 was a measure that has saved the airline from doom and imminent collapse. He recalled that when the Receiver Manager came onboard on February 9, 2017, the airline’s status as a going concern was gravely threatened due to its poor management. The fleet, he affirmed was down to only eight serviceable aircraft, many of its assets were abandoned in different parts of the world while the maintenance hangar littered with unserviceable aircraft and related equipment.

He added, “Even some of the serviceable aircraft were due for various checks. Staff were owed between four to six months’ salary and staff morale was at the lowest ebb. Fleet insurance was due and the airline basically struggled to pay the premium. Vendors were owed colossal amount of trade debts to the extent that no oil marketer was willing to advance trade credit to the airline. The former management found it extremely difficult to pay for fuel and as a result flight cancellation was rife, on-time performance (OTP), which is a measure of an airline’s ability to meet scheduled flight time plummeted leading to significant customer attrition and loss of confidence. Furthermore, regulatory agencies were owed incredulous amounts of money and by way of example, passenger service charges impressed with trust collected on behalf of the government had not been remitted for several years. So also were huge sums of money deducted from workers’ salaries over many years which were not remitted to Pension companies. The flying public was equally owed several millions of Naira and foreign currencies on account of unflown tickets and cancelled flights.”

The legal luminary further disclosed that consequent upon measures taken post receivership, OTP, which had fallen abysmally to 19% a month before AMCON’s intervention, climbed up steadily and currently averages 63.5%. Cancellations, which were as high as 40% as at January 2017, has been significantly reduced to less than 4%. Average load factor is currently over 73% whilst aircraft utilization has also increased by about 50%. The statement also revealed that the shareholders of the company neglected the most basic requirement of airline operations by refusing to build up any maintenance reserve in support of the operations. Most regrettably, most of the aircraft and related assets fell due for heavy maintenance about a year into the receivership.

Again he said, “Without the benefit of maintenance reserves, Arik was inevitably confronted with a financial storm, which would have sunk the airline but for the help of AMCON and prudent management by the Receivership team. There has been a gradual increase in the number of serviceable aircraft as a result of huge investments in fleet maintenance. In the first and second quarter of 2018, the fleet serviceable planes increased to 13. The claim that the fleet of serviceable planes fell to three is patently false. The airline places a high premium on staff training to maintain its safety standards and meet national and international operational requirements. The management team has therefore ensured that staff undergo mandatory trainings, locally and internationally. Furthermore, all unpaid salary obligations have been paid while current salaries and pensions are paid/remitted as at when due.”

Opasanya also recalled that at the time AMCON appointed a Receiver Manager, Arik’s debts were in excess of N300 billion. The airline had lost the confidence of key vendors, maintenance repair organisations and part suppliers. These creditors are both local and international. Consequently, resolution has entailed several hours of local meetings and international travels to forestall service disruptions and aircraft seizure/arrest. Critical vendor relationships have been revamped and trade lines restored. Arik now enjoys the confidence of partners.

Reassuring the public, he said, “The airline is being run under unique governance arrangements that has ensured that costs are prudently optimized and that all departments of the company function in an orderly and professional manner. It is gratifying to report that the airline’s Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) was negative in 2017 but in 2018 was significantly positive. The financial trajectory has been positive, proving that a professionally run airline has a future in Nigeria. Following the impressive performance of Arik Air in Receivership, local and foreign investors are showing keen interest in the airline. Past attempts to resolve the debt issue with legacy shareholders have been frustrated by their insincerity exemplified by the presentation of fake and bogus investment proposals (false financial backing), confirming the lack of corporate governance and diligence in their approach to business.”