• Friday, July 19, 2024
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BusinessDay

Legal hurdle grounds NG Eagle’s take-off

AMCON recovers N1.6tn debt since its inception – Kuru

After getting the regulator’s green light to begin operations, NG Eagle, a new airline being promoted by the Asset Management Corporation of Nigeria (AMCON), is facing a legal hurdle that looks set to delay its take-off.

The federal government, through the Nigeria Civil Aviation Authority, had last week issued the Air Operating Certificate (AOC) to NG Eagle.

An AOC is an approval granted by the regulator to an aircraft operator to allow it to use aircraft for commercial purposes.

BusinessDay’s investigations show that after AMCON took over operations of Arik Air, some of the airline’s planes were rebranded and changed to NG Eagle.

In 2021, when our correspondent visited the Maintenance, Repair and Overhaul facilities of Ethiopian Airlines in Addis Ababa, it was observed that some Arik Air’s Boeing 737-700 aircraft were being rebranded to NG Eagle.

The development caused uproar in the industry as many expressed concerns over the decision of AMCON to transfer the airline’s assets.

Despite the agitations against the transfer of Arik’s asset, the NCAA issued an AOC to the airline last week.

But after the AOC issuance, the Federal High Court sitting in Lagos stopped the decision to transfer Arik Air Limited’s assets by AMCON to another company to take over their operations.

The ruling was given by Justice Ambrose Lewis-Allagoa.

Stakeholders in the industry have said despite the AOC issued to NG Eagle, the take-off of the airline would be suspended following the court ruling.

Our correspondent visited the Murtala Muhammed Airport in Lagos on Thursday and observed that three Boeing 737-800 series planes painted in Nigeria Eagles colour were parked at the airside.

A source close to Arik told BusinessDay that the planes were Arik planes, which AMCON seized and planned to hand over to NG Eagle but that cannot now happen as the parties are in court at the moment.

“The belated AOC given to NG Eagle is not something that anyone should rejoice about and I don’t think that it is a success story because most of the aircraft that were supposed to be used have been cannibalised and the engines removed and those aircraft cannot immediately fly,” Olumide Ohunayo, an aviation analyst, told BusinessDay.

“So, the issue of resuming operations is not feasible because they need to do a lot of things. The court issue will also not allow the airline to kick off operations.”

He said the court judgement has automatically stopped the operation of the airline.

“I don’t think the national carrier and NG Eagle will operate before May 29, which is the handover, and even if they operate, they will be grounded in no time,” he added.

Sindy Foster, principal managing partner at Avaero Capital Partners, said it was inevitable that the transfer of the assets would be challenged in court and an injunction sought to prevent the launch.

“I am quite surprised that the issues with ownership and value of assets which came from Arik (and are part of ongoing court proceedings) have not delayed the issuance of AOC for NG Eagle. Having been delayed for nearly two years, it would be interesting to know what has changed,” Foster said.

She said the current developments would not sit well with investor security if while in the midst of a legal challenge, assets can just be moved to a new entity.

Foster said this has far-reaching ramifications and will impact investor confidence in not just the legal system, but financial protection offered under the Companies and Allied Matters Act and the role of regulators.

Kamilu Alaba Omokide, receiver manager, Arik Nigeria Ltd had handed the assets of Arik Air to NG Eagle Limited and Super Barvo Limited.

The management of Arik Air approached the court to set aside the decision.

Johnson Arumemi Ikhideit, the founder of Arik Air (the plaintiff), and Mary Arumemi Ikhide, co-plaintiff, dragged AMCON, its group head, NG Eagle Limited; Super Bravo Limited, and NCAA before the Federal High Court over the takeover of Arik Air Limited’s assets and management.

In the suit, the plaintiffs prayed the court for four reliefs, which included a declaration that the duty imposed on the 1st defendant by Section 553 of the Companies and Allied Matters Act 2020 to act in the best interest of Arik Air as a whole includes the duty to act in the best interest of the plaintiffs as members of Arik Air.