Arik to challenge take over in court

Arik Air, placed on receivership earlier this week by Asset Management Company of Nigeria (AMCON) has accused the government of attempting to forcefully take over the airline to meet a political goal of creating a “national carrier” and said it would challenge the move in court. AMCON said earlier in the week that the move arose from Arik’s inability to pay workers and creditors. Arik is West Africa’s biggest airline by passenger numbers but has been hard hit by Nigeria’s currency crisis as its customers are invoiced in naira but fuel suppliers are paid in dollars.

Arik founder Michael Arumemi-Ikhide said he believed the government staged the move after a team travelled overseas in search of partners but were turned down and advised to work with the decade-old Arik.

“This (takeover) was designed by the government. Ever since this government came into power there has been the ambition to have a national carrier,” Arumeni-Ikhide told Reuters. “We are going to challenge the forceful takeover in court. By earlier next week we will be filing the case.”

Analysts say the dispute showcases the complexity of doing business in Nigeria, with some suggesting it could damage Nigeria’s efforts to shake off its image as a risky frontier market for international investors.

Arumemi-Ikhide said AMCON had used armed police to take control of the airline on Thursday, but that shareholders have retained their shares. AMCON said it had a court order to take over Arik and had to use policemen and bailiffs to carry it out.

Arumeni-Ikhide said the action recalled 2010 when British billionaire Richard Branson pulled out of Virgin Nigeria, a 10-year partnership with the Nigerian government he helped set up, citing alleged interference by politicians and regulators.

AMCON said on Thursday a receivership manager had been put in charge of Arik as the airline had been fallen into a “precarious situation largely attributable to its heavy financial debt burden (and) bad corporate governance”.