Home Uncategorized Aviation requires solid capital, policy consistency, govt support to thrive…..AMCON boss

Aviation requires solid capital, policy consistency, govt support to thrive…..AMCON boss

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The Managing Director/Chief Executive Officer, Asset Management Corporation Of Nigeria (AMCON), Mr. Ahmed Kuru, says the aviation and transport sector requires solid capital to make it deliver for the good of the Nigerian people.

The AMCON boss who stated this at an event in Lagos, said it would require a measure of policy consistency and governmental support to thrive.
Kuru noted that from experience, no matter the capital thrown at the sector, if corporate governance was not strengthened, it would still fail.

He said, “absence of governance or quality governance and sound financial risk management systems is at the heart of the failures that are common in the sector”.
“I urge regulators to act with courage by insisting on proper governance in airlines. I recommend they look at the work being done by CBN and Financial Reporting Council to improve the practice in airlines”, he added.

Speaking on why AMCON had to intervene in Arik and Aero contractor, Kuru said, at the point of intervening in Arik, the company was witnessing a high spate of flight cancellations of up to 40% , on-time performance (OTP), which measured the promptness of schedule flights had fallen to as low as 15%.

According to him, staff, including pilots were owed salaries, in some cases for up to six months, “Staff morale was therefore understandably low. Several service providers including fuel marketers, maintenance and spare part companies were withdrawing services or were unwilling to extend credits”.

Explaining further, he emphasized that, “there were indeed significant concerns at various governmental cycles for safety and the possible impact of the collapse of the company on the economy. We are glad to report that this position has been largely arrested. Cancellations are down to 4%, OTP is over 60%, all owed salaries of current staff are fully paid, suppliers are now being paid as at when due. This of course has come at a cost to AMCON and not without with the unparalleled support of the Central Bank of Nigeria and local banks”.

On Aero, “we succeeded in ensuring that the airline remains a going concern. And with the strengthening of its management, we have seen a refocus on the strengths and capabilities of the airline. The Maintenance Repair and Overhaul (MRO) licence has been made active. The airline in February succeeded in completing a c-check on a Boeing 737; a huge feat with a potential for savings in foreign exchange demands by local airlines”.

The AMCON boss who expressed satisfaction that the intervention in the sector had paid off, said it had ensured that Nigerians were offered choices, there was now an enhanced positive competition leading to improved service offering for the flying public,

“As a major policy drive of this government, we were able to save over 3,000 direct jobs, and hundreds of indirect jobs in the airline industry. We are indeed proud to have played this important role”.

He however noted that this was no without challenges, “expectedly, the intervention has not come without its challenges. These include shareholder actions, lack of support by some trade creditors, some foreign lenders, and increased union demands. These were not unexpected and have been professionally and transparently handled”.

“The new management in Arik had to take bold decisions to downsize its operations, especially cutting down all the long haul flights, due to the losses being sustained on those operations, and the lack of equity capital to absorb the losses”.

“Generally there was the need to reassure the traveling public. AMCON is an asset management company, not a consultancy firm to run airlines. So we got professionals to do the job. They are the ones running the airlines. There were scepticism in some quarters earlier on but the narrative has changed. Nigerians are happy with our intervention in the transport sector. However, a lot still needs to be done” he added.

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