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Retrenchment looms in Arik with drastic flight reduction

by IFEOMA OKEKE

March 2, 2017 | 7:35 pm
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With drastic reduction of flights from 120 to an average of 18 daily, there are indications that Arik Air would retrench majority of its workers, as its revenue continues to dwindle and the number of airworthy fleet continues to decrease.
The airline has about 2,000 workforce in its Nigerian operations with about N1 billion monthly wage bill and, according to inside sources, the airline has a projected monthly revenue of N1.5 billion, which is not enough to meet operating costs, offset aircraft insurance bills or pay its creditors.
But Simon Tumba, media consultant to Arik Air, denies the airline has any plan to sack the workers, saying instead of sacking workers, the new management appointed by Asset Management Corporation of Nigeria (AMCON) is planning to service five more aircraft and put them back in the air.
But the challenge the airline is having is lack of funds because it cannot on its own generate enough revenue to service the aircraft already on AOG (aircraft on ground), source fuel and pay the workers.
To service the five airplanes mentioned by Tumba, the airline will need about $1.5 million, which it may likely source from the black market.
There has been talks that AMCON may inject about N15 billion into the airline as start up fund after the initial funding of about N4 billion, but the hope of getting more fund from the government agency continues to recede as the Roy Ilegbodu leadership of the airline grapples with the challenge of managing the company.
On the alleged debt owed the International Air Transport Association (IATA), former management of Arik Air explains that it did not owe the international agency, but the IATA has the mandate to collect the revenues of the Federal Airports Authority of Nigeria (FAAN), the Nigerian Civil Aviation Authority (NCAA) and the Nigerian Airspace Management Agency (NAMA).
So, as Arik pays its charges to these agencies, the invoices were duplicated in IATA, so the alleged $78 million debt was a misunderstanding, “We have our receipts and banking tellers to back these payments, which we made directly to these agencies instead of through IATA, an Arik source says.
Other inside sources have also disclosed that the airlines would have to sack some of the expatriate pilots and some Nigerians, because it cannot keep the workforce when it could not generate enough revenue to pay the bills “because even now we are already incurring heavy losses.”
It was also learnt that some of the expatriate personnel and technical staff have started leaving the company on their own because of the reduction in operations and cabin crew now scramble to be shortlisted for work.
“To fix the airplanes we need money. We may have made a mistake by stopping the Lagos-London flights because it is now difficult to get spares from the manufacturers, which we used to fly in from London and we need the spares on regular basis,” a management official says, adding that the new management has to cut off regional and international flights because it is difficult to source forex to services those routes, as the devalue of the naira continues to threaten Nigerian airlines.
 
 

by IFEOMA OKEKE

March 2, 2017 | 7:35 pm
  |     |     |   Start Conversation

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