ARIK’S TIMELY PLEA BARGAIN

The pains and agonies of our domestic carriers seem unending; luckily none have bitten the dust of late.
We were still basking in the glory of a new carrier, First Nation, which will be flying the Nigerian skies very soon with aircrafts that will puncture the dominance of the Boeing 737, increase competition and most probably improve service delivery, when the rumour or the news filtered that the government was planning to convert Arik to a national carrier. Barely five days later, a national daily informed Nigerians that the government has decided to buy the airline’s toxic debt through AMCON.
The airline has not come out categorically to deny the stories rather the spokesperson came out with a veiled statement, that “we are not aware”. It is an open secret that the carrier is indeed having liquidity problems, considering recurrent delays of staff salaries, debts or related issues with agencies and other service providers have become a norm rather than an exception.
It is also true that the industry is predominantly financed by different financial instruments, therefore owing and servicing these debt is a noble commitment of all organisations properly managed and willing to remain in business.
How did Arik get to this stage? Let me start with the government that has refused to enshrine policies and strategies that will operationally strengthen our carriers. Airline issues are viewed and operated as an instrument of national strategy and often times integrated vertically across commerce and tourism. It is also integrated into the country’s foreign policy. Since the demise of Nigeria Airways and the still birth of its replacement, the government has practically abandoned the domestic carriers except for the bailout fund that was recently granted, which is difficult to utilise due to loan re-financing condition attached.
Arik’s growth was too fast and equally too furious coupled with managerial and corporate arrogance. They started operations by being top heavy with expatriates from failed European airlines, and later got some ex -Virgin Nigeria mercenaries who had left VN with huge debts accumulated from operational and leasing expenses. Not surprisingly, the mercenaries and most of the first generation of expatriates did not last, as they were enmeshed in financial or social mess that haunt Arik till date.
The owner manager syndrome is another structural cankerworm inherited by the airline from our skies, the effects of this syndrome are: access to capital will be difficult and expensive; executive discipline lacking in the absence of a functional board; collaborative discussions are primarily trimmed to the owner’s wish list, rather than commercial benefits; mergers & consolidations are rare, except when they are legislated. It also whittles down public support or legislative backing as they are seen as Mr. A airline and not Nigerian flag carrier
Ironically, Arik opposed bailout for domestic carriers, by working assiduously to frustrate Capt Boyo led committee on bailout modalities, today the airline, is limping critically towards the fund, we should also not forget that, rather than battle foreign carriers for the control of the Nigerian market they wanted to completely annihilate the domestic carriers with grave monopolistic consequences .




Compared to other carriers’ world over, Arik is a small carrier but a behemoth in Nigerian airspace. It should not be allowed to die. Every option must be explored to save the airline with an exception, Nationalisation.
Nationalisation did not work in Greece, Argentina, Senegal Gabon etc; it will also not work here, with a bloated executive, an insatiable legislative arm and an army of ex this-ex that. It will send us back to the era of free tickets, flight diversion and aircraft commandeering.
Arik can also take a cue from Vijay Mallya, the CEO of Kingfisher Airlines in India, who has managed to convince banks to grant him a breather on the carrier’s debt of $1.55 billion, partly by converting some of it into equity, incidentally the A340 kingfisher ordered and later backed out at the point of delivery, was picked by Arik.
AMCON intervention is timely and necessary, which is tantamount to a plea bargain from Arik. The airline is admitting guilt and may be financially sentenced without serving the term, but the record will be there.