Ethiopia Airlines Renegotiating Management Contract for Arik Air with FG

Chinedu Eze

After few months of prevarication, THISDAY can authoritatively report that the Ethiopia Airlines has been negotiating management contract for Arik Air, which was taken over by the Asset Management Corporation of Nigeria (AMCON) in February this year owing to the debts owed it by the owners of the airline.

THISDAY learnt that Ethiopia Airlines has sent delegation twice in the last two months to Abuja to discuss with the federal government and the Nigerian government had also sent a delegation to Addis Ababa.

The focus of the management contract is that Ethiopian Airline will take full management of the airline and also provide technical support.

What this means is that the East African airline will have to second some of its management and technical staff to Nigeria and also code-share with Arik and kick-start some of the international routes, suspended by the receiver manager, when AMCON took over the management of the airline.

THISDAY learnt that the initial plan when AMCON took over Arik Air was to hand over the airline to Ethiopia Airlines, but some top officials of the East African carrier objected to that because of perceived hostility and the threat by the former management of Arik to take Ethiopian to court if it dared run the airline.

Informed source said that Ethiopia realised that without the cooperation of the then management of Arik Air it would be difficult to succeed in managing the airline, but since then there seems to be armistice between the owner of the airline, Sir Joseph Arumemi-Ikhide and the federal government.

The deal with Ethiopia Airline might have become urgent considering that AMCON has one year arrangement with the airline, which means that by February next year it would hands off the airline, so government must have to either hand over the airline to the owner or arrange for another management to run it.

THISDAY learnt that Ethiopia Airlines which might have contemplated having a stake in the airline but it is now negotiating for purely management contract, which the federal government would have to pay for. But while some industry sources said that that would be a sure way to sustain the operations of the airline, others are of the view that it would give Ethiopian the opportunity to take advantage of the Nigeria international travel market.

“If they code-share with Arik Air what the airline will be doing is to gather passengers for international destinations for Ethiopia Airlines, a kind of thing Virgin Atlantic used the defunct Virgin Nigeria to do in the past,” a source told THISDAY.

But an operator also told THISDAY that it would be a key way to sustain the operations of Arik Air.
“Ethiopian Airlines is committed to Africa and they have shown passion for Nigeria and make sacrifices in this country, which no European airline can make. You cannot compare them to Virgin Atlantic or any other European carrier,” the source also said.

But a source close to Arik Air said that what Arik needs is to be turned into a national carrier, remarking that government is wasting funds on setting up a national carrier.

“Engaging Ethiopia Airlines is not even a short term approach but a waste of money. Government can constitute a panel of experts and stakeholders to look at the situation and restructure the company. Ethiopia Airlines owes Ethiopia government about $32 billion and it is virtually tax and levy exempt. So the federal government should grant Arik national carrier rights and eventually sell government stake in Arik through IPO.

“Nobody will finance national carrier in Nigeria today. Arik offers turnkey solution, as it is a running company. Government can renegotiate and reduce the bank debts and get creditors to take a haircut on the debts,” the source told THISDAY.