Tag: Arik

A Failure should be our teacher, not our undertaker. Failure is delay, not defeat. It is a temporary detour, not dead end” Denis Waitley.
The concluding part of the above quote from the American writer is just as compelling: “Failure is something we can avoid only by saying nothing, doing nothing and being nothing”.
Arik Airline filled a vacuum left by the failure of government-run Nigerian Airways and, after its demise, other efforts to float a national carrier. They provided us with an expansive fleet for domestic air services and even forayed into the international route for our sake. They made it look like something good could come out of the African giant of a country, Nigeria. The combination of robust demographic and economic potential enabled the airline to grow in leaps and bounds.
But why did Arik Airline so suddenly take a plunge? That’s the question that its owners must ask themselves in a genuine soul search – instead of weaving conspiracy theories or engaging in an unnecessary fight against Asset Management Company of Nigeria (AMCON) for intervening in the management of their organization.
Nigerians are not gullible lots; we can discern truth from fairy tales. We need no one to trivialize the issues with emotive terms like “cabals”, “hidden agenda”, etc, to divert attention from the real issues.
Despite the setback, people still have fond memories of their efforts to fill a yawning gap in Nigeria’s economic development. Arik Airlines’ promoters must seize the opportunity to redeem their hard-earn reputation and accept their failure with courage. At the risk of repetition, whatever comes out of the current situation of Arik Airlines, the organization has earned itself a permanent place in Nigeria’s Aviation Hall of Fame.
The myriad of problems of Arik Airline today cannot be swept away under the carpet as “some challenges,” as some people would like us to believe. The dangers of Arik’s failure were not limited to passenger disenchantment and failing to pay staff, debilitating as these were. Also affected were much wider stakeholders—bankers; lessors; insurance companies; food vendors; tax authorities; and our reputation as a nation abroad. All these translate to N300 billion-naira debt overhang!
Efforts to blame Arik’s predicament on the economic circumstances of Nigeria cannot hold water either, as its failure is a sad commentary on the management of the nation’s economy that led to the current recession and forex squeeze. We need to look beyond the macro- factors and focus on some micro factors—the question of governance; of how Arik was being run of late.
Nigeria’s economy is now a complex one. Wherever you see a multi-billion Naira worth of investment, you will find out a complex maze of investors are involved. Mr. Joseph Arumemi-Ikhide may be the initiator of the ARIK, a named conjured from his, but the Arik of today is by far more than the creature of the Ikhides. Bank finances in billions are involved. Creditors of different services that the airline relied upon are intertwined. Not to talk of other interests such regulatory institutions and tax authorities. The workers’ union is a critical stakeholder; recall that the recently flexed their muscles by shutting down the offices of Arik across the country over unpaid wages of staff.
It is precisely this complexity of our rapidly growing economy that brought the need for the establishment of institutions like AMCON in the first place. We need to have an institution that will give our much needed investors the confidence that their investments in our capital market or banking system (sources of finances for our business ventures) will be protected.
Established in 2010, AMCON is the innovative idea thought of to initially help stabilize the banking system from systemic collapse after going through well-conceived structural reforms, which involved bank consolidations, recapitalization and managerial changes at some banks, and portfolio clean-ups. These reforms provided a solution to the banking crisis that Nigeria experienced few years ago and eventually the soundness in the banking sector was restored.
Its objectives include assisting eligible financial institutions to efficiently dispose of eligible bank assets; efficiently manage and dispose of eligible bank assets acquired by it; and obtaining the best achievable financial returns on eligible bank assets or other assets acquired by it. It is through this process that AMCON came to acquire some of the NPLs Arik has accumulated to the tune of over N100 billion.
When AMCON intervened in our banking industry, it acquired about 13,774 Non-Performing Loans (NPLs) worth N3.6 trillion from 22 commercial banks and thus saved our banking system, while its provision of financial accommodation of N 2.2billion protected about N 4.7trillion of depositors’ funds and interbank takings as well as saved approximately 14,000 jobs.
Five years ago it intervened in the aviation industry by saving Aero Contractors from closing shop. Today it is intervening to save Arik from eventual and total collapse under a whopping N300 billion debt overhang.
Sentiments should be put aside. AMCON has a responsibility to save a business in which the public has colossal stakes, to mitigate loss of huge sums invested with grave risks to creditors, avert disruption of domestic and international air services, and save jobs. These are the grounds for AMCON’s intervention. Arik Airline must positively come to terms with the change of its management. Let the owners heed Denis Waitley’s words of wisdom and not see failure as defeat!

•Bagudu is a financial analyst based in Abuja