The Asset Management Corporation of Nigeria (AMCON) has reaffirmed its commitment to recover a staggering N227 billion owed by Arik Air, marking another chapter in the high-stakes battle between the debt recovery agency and the embattled airline.
Mr. Jude Nwauzor, Head of Corporate Communications at AMCON, disclosed this during an interactive session with aviation journalists in Lagos on Friday.
“AMCON continues to face resistance from a number of debtors who are unwilling to pay without a fight. One of these debtors is Arik Air Ltd. (in Receivership),” Nwauzor said.
Efforts to Revive Arik Air Have Failed
Arik Air, once a dominant player in Nigeria’s aviation industry, has been under AMCON’s receivership since 2017. Despite years of efforts to resuscitate the airline, Nwauzor revealed that only nine of its aircraft were serviceable when AMCON took over operations.
“Arik Air’s financial troubles became evident when Union Bank of Nigeria classified the company’s N70 billion loans as non-performing in 2010. This loan exposure was a significant factor in Union Bank’s financial challenges,” Nwauzor explained.
The debt issues surrounding Arik Air extend beyond the airline itself. Sir Johnson Arumemi-Ikhide, the founder of Arik Air, is also the promoter of Rockson Nigeria Limited, Ojemai Farms Limited, and Ojemai Investment Limited—companies that collectively owe AMCON a total of N455.17 billion.
How Arik Air’s Debt Escalated
Arik Air’s troubles began over a decade ago when Union Bank flagged its loans as a threat to the bank’s stability. In a letter dated October 22, 2010, Union Bank informed the airline that its loans had been classified as non-performing, citing the Central Bank of Nigeria’s Prudential Guidelines.
The airline’s debt, which stood at N70 billion at the time, ballooned over the years, prompting Union Bank to transfer the non-performing loans to AMCON.
“Arik Air owes AMCON N227.63 billion, while Rockson Engineering owes N163.50 billion, and Ojemai Farms owes N14 billion,” Nwauzor detailed.
The cumulative debt transferred to AMCON from various banks underscores the depth of financial mismanagement within the debtor companies.
The Role of the AMCON Act
AMCON’s actions are backed by the provisions of the AMCON Act, particularly Sections 6 and 48, which empower the agency to take necessary steps to recover debts owed to it.
Nwauzor highlighted the importance of this legal backing, stating, “AMCON has a mandate to protect Nigeria’s financial system from systemic risks posed by non-performing loans. Our decisions are in line with this responsibility.”
Resistance and Liquidation Plans
Despite its legal authority, AMCON has faced significant pushback from debtors. Arik Air has been no exception.
“Arik Air’s resistance has complicated efforts to resolve this issue amicably,” Nwauzor noted, adding that the agency remains resolute in its plans to liquidate the airline if necessary.
AMCON’s decision to pursue liquidation stems from the failure of several revival attempts. The corporation believes this route may be the only viable way to recover its funds and bring closure to the long-standing debt saga.
Impact on Nigeria’s Aviation Industry
The financial turmoil surrounding Arik Air has broader implications for Nigeria’s aviation sector. Once dubbed the “pride of Nigeria,” the airline’s struggles highlight the challenges facing the industry, including poor corporate governance, high operational costs, and insufficient regulatory oversight.
Industry experts believe that the resolution of Arik Air’s debt issues could set a precedent for addressing similar cases within the sector.
AMCON’s Broader Mandate
AMCON was established in 2010 to stabilize Nigeria’s financial system by acquiring non-performing loans from banks and recovering debts from defaulting entities. Over the years, the corporation has taken over numerous companies across various sectors, aiming to recover billions of naira owed to Nigerian banks.
While AMCON has recorded successes, the scale of its challenges remains daunting. As of December 31, 2024, the agency had taken on N455.17 billion worth of debts, including those of Arik Air.
Legal Battles and Future Outlook
The debt recovery process has not been without legal hurdles. AMCON has engaged in multiple court battles with Arik Air and other debtors, seeking to enforce its rights under the AMCON Act.
As the case unfolds, stakeholders in the aviation sector are watching closely. The resolution of Arik Air’s debt could serve as a critical test of AMCON’s ability to fulfill its mandate effectively.
Nwauzor concluded with a firm message: “We remain determined to recover every kobo owed to AMCON. It is not just about the money; it is about ensuring accountability and protecting Nigeria’s financial system.”
