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Nigeria’s government is taking over the country’s biggest airline, Arik Air, to “instill sanity” and prevent “a major catastrophe” in the aviation industry of Africa’s most populous nation, the receivership corporation said Thursday.
Asset Management Corporation of Nigeria said the heavily indebted airline has not paid workers for months and has had aircraft seized for non-payment of leases. Arik has regularly canceled flights because of lack of money to buy fuel, stranding thousands of passengers over the past year.
The statement came after Arik temporarily canceled service to New York and grounded 10 aircraft.
Arik is the biggest airline in West Africa and flies 55 percent of domestic flights in Nigeria as well as transcontinental routes to London and New York.
The statement said the government decision to intervene “clearly underscores a commitment to instill sanity in the country’s aviation sector to prevent a major catastrophe.”
It blamed Arik’s “heavy financial debt burden, bad corporate governance, erratic operational challenges and other issues that required immediate intervention.”
Airlines have been hard hit by Nigeria’s currency crisis, with tickets paid in devalued naira but scarce foreign currency needed for fuel.
United Airlines and Iberia pulled out of Nigeria last year over the currency crisis, in which international airlines lost millions of dollars while the government blocked their remittances in foreign currency and the naira tumbled.
Two other Nigerian airlines stopped operating last year.
Source: skift.com