by Kaleyesus Bekele
Aviation International News
March 21, 2017
The government of Nigeria recently asked to forge a partnership with Ethiopian Airlines to re-establish its national airline, which ceased operation in 2012.
Ethiopian Airlines Group CEO Tewolde Gebremariam told AIN that the Nigerian government approached his management for the assistance during a recent visit to Nigeria. Gebremariam declined to reveal the details of the plan, explaining that the discussion remains at an early stage. However, he said that both sides have expressed interest in cooperating. “There is also the possibility that we may discuss equity investment in the future, but for the time being it is only management contract that is under discussion,” he noted.
One-time flag carrier Air Nigeria ceased operation in 2012 due to financial difficulties, leaving Africa’s largest economy without a national airline. Ten years earlier Nigeria Airways liquidated and Virgin Nigeria, a joint venture between the government of Nigeria and Virgin Atlantic, had also collapsed.
Arik Air, the largest private airline in Nigeria, has served as a de-facto national carrier since Air Nigeria’s failure. However, Arik Air has also suffered from financial difficulties and mounting debt. The Nigerian government, through the Asset Management Corporation of Nigeria (Amcon), on February 9 took control of Arik Air after the airline failed to pay its employees and creditors for months and grounded most of its aircraft.
Established in 2006, Arik has been serving 26 domestic, regional and international destinations including Johannesburg, London and New York with 29 aircraft, mainly Boeings. The airline operates 60 percent of Nigeria’s domestic flights.
Amcon estimated Arik’s debt profile to total more than 300 billion naira ($946 million) and accused the airline of lacking corporate governance. “Arik’s bad corporate governance, erratic operational challenges, inability to pay staff salaries and heavy debt burden among other issues led the authorities to call for the bank’s intervention,” Amcon said in a statement issued last month. The state owned bank appointed a new management team that runs the airline. The founders of Arik furiously protested the government’s decision to take over the airline. In fact, the founder of Arik Air, Joseph Arumemi-Ikhide, warned that he would sue Ethiopian Airlines if it dares to take over the management of Arik Air.
Sources close to the negotiations told AIN that an Ethiopian delegation has twice visited Lagos while a high-level Nigerian delegation came to Addis Ababa to discuss how Ethiopian Airlines might assume control of Arik Air’s management. A member of the Ethiopian delegation that went to Lagos for the negotiation added that the Nigerian authorities wanted Ethiopian to take over Arik immediately to save the airline from collapse. “But we want to take some time and assess legal issues carefully,” the senior executive said.
Meanwhile, a Nigerian media outlet recently reported that the management of Ethiopian Airlines has rejected the offer.
Gebremariam denied the news report. “The news is not true,” he told AIN. “We are still discussing and we will reactivate the negotiation very soon since there is interest on both sides.”
Ethiopian Airlines is a big player in Nigeria, serving four destinations in Africa’s top oil producing country—namely Lagos, Abuja, Kano and Enugu—from its main hub in Addis Ababa.
“Ethiopian is a pan-African airline,” Gebremariam said. “We served Nigeria for many years in good and bad times.
Ethiopian Airlines is as old as Nigeria because we started flying to Nigeria right after decolonization.”
Ethiopian has invested in ASKY Airlines in West Africa and Malawi Airlines in southern Africa and manages both under contract. The Ethiopian flag carrier also continues to negotiate with the governments of Rwanda, Uganda, DRC and Zambia to form similar partnerships.
Source : Aviation International News