…says corporation ‘ll exit sector at the right time
By Sade Williams
Mr. Ahmed Kuru, Managing Director/Chief Executive Officer, Asset Management Corporation Of Nigeria (AMCON), has given insights into how government helped in stabilizing operations at Nigeria’s foremost airlines, Arik Air and Aero airline, over one year ago when they were at the verge of folding up due to huge debts.
Speaking at the at 6th Nigeria Transport Awards And Lecture in Lagos, at the weekend, he said AMCON simply went into both airlines to do the job it was created to do as ‘a stabilizing and revitalizing tool in the Nigerian economy’.
Kuru, who spoke on the topic: AMCON’s intervention in Transport and Allied Sector; Achievements, Challenges and Prospects., said at the point of intervening in Arik, the company was witnessing a high spate of flight cancellations of up to 40% , on-time performance (OTP), which measures the promptness of schedule flights had fallen to as low as 15%. He added that staff, including pilots were owed salaries, in some cases for up to six months.
“Staff morale was therefore understandably low. Several service providers including fuel marketers, maintenance and spare part companies were withdrawing services or were unwilling to extend credits. There were indeed significant concerns at various governmental cycles for safety and the possible impact of the collapse of the company on the economy.
The AMCON boss, who noted that government intervention in Arik and Aero were intended to be value adding and non-destructive, added: ‘We are glad to report that this position has been largely arrested. Cancellations are down to 4%, OTP is over 60%, all owed salaries of current staff are fully paid, suppliers are now being paid as at when due. This of course has come at a cost to AMCON and not without with the unparalleled support of the Central Bank of Nigeria and local banks.
At Aero, Kuru said AMCON succeeded in ensuring that the airline remains a going concern, adding that with the strengthening of its management, there is a refocus on the strengths and capabilities of the airline.
“The Maintenance Repair and Overhaul (MRO) licence has been made active. The airline in February succeeded in completing a c-check on a Boeing 737; a huge feat with a potential for savings in foreign exchange demands by local airlines. The intervention in the sector has ensured that Nigerians are offered choices, there is an enhanced positive competition leading to improved service offering for the flying public,
“As a major policy drive of this government, we were able to save over 3,000 direct jobs, and hundreds of indirect jobs in the airline industry. We are indeed proud to have played this important role, he added.
While tasking the Nigerian Civil Aviation Authority (NCAA) to take a cue from what the Central Bank of Nigeria (CBN) and Financial Reporting Council are doing to ensure quality governance in the financial sector, he said until corporate governance in strengthened in the airline sub-sector, their operations will still fail.
“The aviation and transport sector requires solid capital to make it deliver for the good of the Nigerian people. It will require a measure of policy consistency and governmental support to thrive. However, from our experience, no matter the capital thrown at the sector, if corporate governance is not strengthened, it will still fail. The absence of governance or quality governance and sound financial risk management systems is at the heart of the failures that are common in the sector. I urge regulators to act with courage by insisting on proper governance in airlines. I recommend they look at the work being done by CBN and Financial Reporting Council to improve the practice in airlines”, he said.
Kuru, however noted that legally, AMCON was not supposed to take possession of businesses but for the huge debt by the ownners.
“ I will not end this paper without reiterating the fact that AMCON does not wish to be in the airline business or indeed any business apart from its legal mandate. So, AMCON will be willing to exit the firms if the owners of the companies pay the debts owed. Where this does not happen, the Corporation will seek to strengthen the intervened companies and undertake a responsible exit in a manner that reinforces the sector”, headded.