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Arik, Aero Seek Survival Strategies

It’s been three years since the Asset Management Corporation of Nigeria took over Arik Air and four years after Aero Contractors also came under AMCON’s management.

In these past years, AMCON boosts that it has successfully stabilised both airlines.

But beyond stability, the airlines, which used to be two of the country’s biggest domestic operators before they came under receivership, have been exploring other ways to remain in business.

AMCON had in February 2016 taken over Aero Contractors by dissolving the board of the airline, saying that the decision was in furtherance of its responsibility of acquiring eligible bank assets and putting them to economic use in a profitable manner.

One year after, AMCON also took over Arik Air over N135bn debt.

While Arik is said to be consolidating on its domestic routes, working on recapturing the West Coast and last year entered into a wet lease partnership for two aircraft with a Tunisian airline, to boost its fleet, Aero has gone into aircraft maintenance, establishing its own Maintenance, Repair and Overhaul facility.

Aero Contractors as part of its strategies recently signed an agreement with India’s RAMCO to automate the processes of its MRO.

The Managing Director of Aero Contractors, Capt Ado Sanusi, stated that when he joined the airline in February 2017, virtually all of the company’s aircraft were grounded for C check, without resources for maintenance.

He said the airline applied for the upgrade of the Aircraft Maintenance Organisation which was approved seven years earlier by the Nigerian Civil Aviation Authority for skeletal services, and equipped it to provide heavy maintenance.

He noted that in the last two years and three months, Aero’s MRO had performed C checks on the airline and other customers’ aircraft; performed landing gear replacements for both domestic and foreign carriers and had also performed reactivation maintenance for many operators on their aircraft that had been grounded for over five years among other achievements.

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Sanusi said, “As our services increased in scope with more third party equipment being brought to Aero’s MRO facility for maintenance, there was a need for improved streamlining of our operations through digitalisation.

“The management of Aero Contractors therefore contracted RAMCO, an aviation software solution provider to offer a software solution that covers everything, monitoring services from the time we enter into a contract with a client all the way to the time the job is concluded.

“It includes the contract itself, costing, billing, logistics, manpower allocation and optimum manpower utilisation. Its integrated business intelligence tools allow you to measure, monitor and manage with the help of advanced analytics.”

Analysts however noted that no matter how stabilised Arik and Aero became, both airlines needed investors to make them profitable.

Aviation analyst, Mr Tayo Ojuri, said both airlines under the management of AMCON have had traction with a semblance of stability.

According to him, the stability is key for their operations; morale of the staff and the investors looking to buy them.

Ojuri, who is also the Managing Partner, Aglow Aviation Support Services, however, stated that they still had the challenge of getting a suitable “groom” to pick them up from the market as the cost of operations and liabilities vis-à-vis the operating environment was not inviting.

“I don’t see the sustainability of AMCON being able to do this in the next three or four years because if they are not able to take their money out, it will be a challenge to the sustainability of the airlines. What they need to do is to make the airlines effective and efficient and focus on attracting investors,” he said.

Ojuri stated that the Federal Government should encourage foreign investors to come in to boost the fortunes of the airlines through technical partnership and strategic financial investment.

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“AMCON is not a manager of airlines, and to recover its debt, there is need to bring in investors,” Ojuri added.

A member of Aviation Roundtable Initiative and Head, Research and Corporate Travel at Zenith Travel, Mr Olumide Ohunayo, said it was laudable that AMCON chose the option of turning the airlines around having seen some values in them.

He said, “Naturally, when airlines run into problems worldwide, they trim down on their operations and try to scale down all high cost operation so as to meet up with expenses; that is what AMCON has done with both airlines.

“During that period, Aero has been able to develop maintenance capability while Arik has gone on to stabilise on domestic operations and now moving on to the West Coast.”

Ohunayo stated that to further make the airlines profitable, the Federal Government should explore the option of merging both carriers for the proposed national carrier.

According to him, both airlines currently constitute about 50 per cent of the domestic passenger market, and the Federal Government does not need to go far in search of an airline to start a national carrier.

He said, “We can as well build the national carrier around these two, I see no reason why the government should go ahead and start a new carrier entirely, making it three airlines in its care.

“That is not right, they should look at these airlines and build a national carrier, they already have a domestic market that can be consolidated on to get the international market.”

He noted that with Aero’s maintenance prowess and Arik’s operational strength, any attempt by the Federal Government to start a new airline would be more of ego than of reality.

Source: Punch

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