Sanusi: Aero Contractors Heading Towards Recovery

The Managing Director and CEO of Nigeria’s oldest carrier, Aero Contractors, Captain Ado Sanusi, speaks about the challenges the airline faced in the last few years, and how it rebound. Chinedu Eze presents the excerpts.

You took over as CEO of Aero Contractors at some point, but later left, and reappeared. What progress do you think the airline recorded within that period?

Yes, so you know I was first appointed in 2017 after the company was shut down due to underperformance and other factors that affected it.

In February 2017, when I assumed office, we started to assess the situation in Aero Contractors and fortunately for us, we moved the company within the next three years to become a viable company from no aircraft to almost five aircraft in our fleet. We were the first to perform a heavy check (C-check, aircraft maintenance) on the airplane and we developed the MRO business.

Then I left for another assignment and unfortunately things went down again in Aero Contractors and I was reappointed in October 2022. When I came in 2022, things were worse than when I first met the company in 2017. Reason being that the airline was shut down and there was outstanding salaries to be paid and workers were de-motivated to work. Again, we looked at what we could do. We had no aircraft, but we took off from zero aircraft and currently we are flying four airplanes. And then we are back paying salaries as at when due. And we are enlarging the capability of the MRO. And we are bringing more aircraft. We moved the number of aircraft to about four, and then paid salaries as at when due.

So we have stabilised the company and it is in the trajectory of recovery. Hopefully by the next few months, we will bring the fifth airplane, and we hope to bring the sixth airplane towards the middle of the year. So I believe we are in the right path. It is a difficult situation and the business environment that we found ourselves in is also difficult to operate. I mean the economy of the country and, of course, the harsh conditions and business have affected us but we are still surviving.

Okay, AMCON has stakes in Aero Contractors. How are they supporting to make sure that the company continues to thrive?

I believe that AMCON should be able to answer this properly. But from what I see from the body language of AMCON, is that they want to keep the company as a going concern. I don’t think they want to invest in the company to make it good so that they can sell it. And I don’t think they want to liquidate the company. So they want to keep it the way it is and sustain it to grow. That is my understanding. And I may be wrong, but that is my understanding of what AMCON is trying to do with the company. Yes, of course, they have stake as of the books, they have 60 percent stake in the airline. But for an airline to survive it must have a vision, it must have a plan, it must know what it’s doing. So, that is why it will encourage our growth and it will enhance our strategy to position the airline in a very good way because if certain fundamentals are not taken care of we can’t keep it as a going concern. We cannot make strategic long-term planning, strategic decisions on how to reposition the airline in the growing market in the country and in the region and of course the world in general. So that will affect us. So a decision must be made in a very good and short time to make sure that we can take a decision on how to strategize whether it is going to be a regional airline or domestic airline or even an international airline.

Putting it succinctly, you need funding?

Yes, we need funding. We need to know where exactly the direction the airline is going. We have been on the receivership for a while now. And we can’t have access to funds because we are under receivership. We can’t make major decisions on investment because we are under receivership.

Is there any plan to exit from the receivership now that AMCON has a controlling share?

Well right from the beginning, like from 2017, there were lots of plans to exit. I was involved in some plans to diversify AMCON ‘s shares in the company. And we went to this, we did all the process from the tender to selection and everything. But unfortunately, again, it was stalled, and I don’t know the reason why. I believe the process is taking longer than necessary, and it’s affecting the survivability of the company. Because if you don’t take a decision on a particular company and you leave it as a going concern, there will be a time when it will not be going again. It has to decide whether it’s going to stop or you’re going to liquidate directly or you’re going to have investors to come in and put money into the business.

Aero has a lot of goodwill, but the undulating situation is affecting your goodwill. Let’s look at the domestic marketing environment and how are you are located in that market?

We are not in the right place. Aero Contractors, of course, the foremost aviation company in the country then, maintained the market share for a very long time. But after the company started underperforming, it went into distress, crisis and everything, and it lost the position of the major market share. And for us when we came back in 2017, when I took over in 2017, when we came back to the market, the brand was strong. It’s a very strong brand. We still did not get to that market share that we wanted to get, but we were at least among the first three. And as of now if nothing is done, if investment is not put into the company, we will still be losing market share in the industry, despite the fact that the brand is a very strong brand and because of its safety history and because of its quality and its tendency not to cut corners. We do things right.

I think that high level of discipline and professionalism have made Aero Contractors a reputable name in the aviation industry. But again, we can’t be relying on that for a long period of time. We must invest in this company to keep it going. We must take a decision on the company so that it can survive and sustain the goodwill and reputation.

Now has any organisation or investor indicated interest so far?

So many investors have indicated interest; so many of them. But again, it’s not my position to have a discussion with investors because it is those that are selling that will welcome such requests or will answer that question better. But for me, as the CEO, I have had a lot of discussions with interested parties which I have said they should go ahead and contact the owners of the business and see whether they can come to an agreement in selling or investing in the business.

Is it possible the owners can cede some of their shares if an investor or investors wish to invest in the company?

Yes. and I believe so. Again, AMCON is in a very better position to answer this. I believe what AMCON can do is sell their stake in Aero Contractors after diluting the shares because of the company’s financial performance. So they dilute the shares so that an investor can bring money into the business without the money that he’s bringing being engulfed into the big debt profile that the company has. So, AMCON is expected to dilute the shares, restructure the company and bring an investor to come in and bring the money to invest in the company. But again, AMCON will have a very good answer for this situation.

How is the Maintenance, Repair and Overhaul (MRO) organization doing?

The MRO is booming. I mean, we are booked to the end of the year, 2024, not 2023. We are sometimes turning down maintenance requests. As you know, we have clearance or we have multiple approvals. We have in Ghana, we have in Mongolia, we have in so many places in the world to do maintenance. We need to invest into our maintenance facility. We need to upgrade our maintenance facility. We need to train our personnel. And we need to expand our capability from effectively carrying out checks on Boeing B737s, the Bombardier Dash 8s to Embraer ERJ145s, the Embraer E2s, the Embraer E1, E2s and Boeing 737 NG aircraft. We have NG already but to upgrade it also but we need to expand our capability so that we can cater for all the other categories. That would be the time to start making revenue. So if we can cater for all the airlines, all the aircraft that are flying in Nigeria and, of course, the West Coast, Western/Central Africa, I think we are nearly a monopoly in this field.