Ethiopian Airlines has rejected offer by the Asset Management Corporation of Nigeria (AMCON) to invest in Nigeria’s biggest domestic airline, Arik Air.
A source close to the government told BusinessDay that the AMCON had met with Ethiopian Airlines to invest in Arik Air, but was turned down.
Although the source did not say exactly why the offer was turned down but suggested that it could be as a result of myriad of issues surrounding the takeover of Arik by AMCON.
Also, Joseph Arumemi-Ikhide, founder of Arik Air, has also confirmed the development, saying the plan by government to invite Ethiopian Airlines to manage Arik Air had failed, and warned that if Ethiopian Airlines dared to take over the management of Arik Air, he would sue the company.
AMCON on February 9 took over the management of Arik Air over mounting debts that it (AMCON) claimed would have grounded the operations of the airline without the corporation’s intervention.
AMCON had put Arik Air’s total debt profile at more than N300 billion and accused the airline of lacking corporate governance.
Speaking on the debt profile, Arumemi-Ikhide said the huge debts to Arik Air’s international creditors were as a result of the depreciating value of naira, adding that last June when the naira plunged in value, the amount of naira required by the airline to service its debts in dollars almost doubled.
He said this prompted Arik Air to instruct Zenith Bank to set aside some of the revenue it earned to service the debts, but when the value of naira nosedived further, the money set aside could not offset the required payments to US Exim Bank, lessors and others.
He said the projections and funding were calculated on N165 per dollar but from the middle of last year naira went down to N305 per dollar at official rate.
This, he said, made it extremely difficult to keep pace with the payment, especially with increase in the price of aviation fuel, which stretched the finances of the airlines.
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