Nigeria's AMCON to sell Air Nigeria assets

The Asset Management Corporation of Nigeria (AMCON) has announced that it will sell three Boeing and Embraer planes, along with other assets, belonging to Air Nigeria.

The Nigerian government set up AMCON in July 2010 to revive the financial system by efficiently resolving the non-performing loan assets of the banks in the Nigerian economy. AMCON has since expanded its purview to include bailing out of troubled companies in the airline industry.

AMCON has initiated the process to sell assets of Air Nigeria. AMCON took control of Air Nigeria assets several months ago and plans to sell these assets to recover the costs associated with settling Air Nigeria’s outstanding debts.

AMCON’s Managing Director, Mustafa Chike-Obi, who did confirm that AMCON would sell the assets has, however, been silent on the transaction process and its current stage of development.

Chike-Obi disclosed that Air Nigeria belongs to UBA Capital, an arm of the United Bank of Africa (UBA) Group.

“AMCON did not buy Air Nigeria. Air Nigeria belongs to UBA Capital, but AMCON has bought the assets. As much as we can, we will sell the assets to recover our money,” he said.

Chike-Obi also said that AMCON would do everything possible to recover the debts owed by other domestic airlines.

AMCON has converted some of the debt of Aero Contractors, a domestic airline, to equity. However, Chike-Obi pointed out that Aero Contractors was still in debt to AMCON.

Chike-Obi said, “Airlines are not different from other companies and individuals owing us. We will collect our money from them. There are still some debts with Aero. We will collect all the money in a way that is supportive of the companies. This is what we are doing, not just for the airlines but for other companies.”

Air Nigeria, originally Virgin Nigeria, and later Nigerian Eagle, is the national flag carrier of Nigeria. However, Air Nigeria has been non-operational since September 10, 2012.

On September 28, 2004, the Nigerian government and the UK-based Virgin Group signed an agreement to establish a new national carrier for Nigeria named Virgin Nigeria. Local institutional investors owned 51% of the company with Virgin Atlantic Airways owning the remaining 49%.

On 19 August 2008, following a dispute which arose after Virgin Nigeria’s domestic operations were moved against the company’s will to a different terminal, Virgin Atlantic announced that it was “in talks to sell its 49% stake in Virgin Nigeria” and reviewing “whether it is appropriate that the Virgin brand should remain linked to Virgin Nigeria”.

On 17 September 2009, Virgin Nigeria announced on its website that it had rebranded as Nigerian Eagle Airlines. Nigerian Eagle Airlines also stated that they planned to focus on domestic and regional flights with further expansion into Europe and eventually to the United States of America. Virgin retained its 49% stake in the new Nigerian Eagle Airlines with the remaining 51% held by Nigerian investors.

On June 2, 2010, following the acquisition of a majority share in the airline by Nigerian businessman, Jimoh Ibrahim, the airline announced a name change to Air Nigeria.

On September 6, 2012, Air Nigeria announced that the management had fired its workers for disloyalty and that it would suspend all its local, regional, and international operations.

According to a 2014 audit report of Nigeria’s Ministry of Aviation, five airlines, including Air Nigeria, owed AMCON NGN 190B (USD 1.1B).

According to the report, the debts owed to AMCON by the five domestic airlines are as follows: Aero Contractors – NGN 34B (USD 200M); Arik Air – NGN 102B (USD 600M); IRS Airlines – NGN 9.4B (USD 55M); Chanchangi Airlines – NGN 9.4B (USD 55M); and Air Nigeria – NGN 35B (USD 226M).

AMCON has stated that the results of this report are incorrect.

Source: AMCON set to sell Air Nigeria assets.