Post Views: 262 The Receiver Manager, Arik Air, Oluseye Opasanya, a Senior Advocate of Nigeria (SAN), on Wednesday assured of significant improvements...
The Receiver Manager, Arik Air, Oluseye Opasanya, a Senior Advocate of Nigeria (SAN), on Wednesday assured of significant improvements in the company’s key performance indicators and health gauges, including payment of its backlog of staff salaries, while pensions have been paid/remitted as and when due.
Following the impressive performance, he said in a statement that local and foreign investors are showing keen interest in the airline following the impressive performance in the last two years, unlike in the past when attempts to resolve the debt overhang with legacy shareholders were frustrated by insincerity, a lack of good corporate governance and diligence in their approach to business.
Opasanya recalled that at the time his team was appointed on February 9, 2017, by the Asset Management Corporation of Nigeria (AMCON), total debt obligations were in excess of N300bn to all manner of stakeholders. This he lamented, resulted in loss of confidence among key vendors, maintenance repair organisations and part suppliers, the airline today has revamped critical vendor relationships and restored trade lines.
The resolution, he continued, entailed several hours of local and international meetings to forestall service disruptions and aircraft seizure/arrest by both local and international creditors.
With the help of AMCON and prudent management by the receivership team, the statement continued, there has been a gradual increase in the fleet of serviceable aircraft from eight to 13 by the second quarter of 2018, owing to huge investments in fleet maintenance. At the time also, he recalled that many of Arik’s assets were abandoned in different parts of the world, while the maintenance hangar was littered with unserviceable aircraft and related equipment.
Consequently, Opasanya said the airline has moved from a situation where it was extremely difficult to pay for fuel, leading to frequent flight cancellations, the on-time performance (OTP), which measure an airline’s efficiency, has risen from 19% pre-intervention, to an average of 63.5%
Owing to the intervention by AMCON, he continued, flight “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%,” even as the company now has maintenance reserve to support its operations.
He regretted that most of the aircraft and related assets had fallen due for heavy maintenance about a year into the receivership, besides the fact that “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.”
As if these were not enough troubles, the statement lamented that Arik Air was also indebted to regulatory agencies were owed unbelievable amounts of money in passenger service charges collected in trust on behalf of the government which were unremitted for several years.
There were also “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.”
Today, Opasanya assured further, Arik Air “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.