At one point in history, aerocontractors was the most valuable, viable aviation company in Nigeria. The sequence of management changes through its acquisition, merger, ownership and partnership have left the company in ruins. Aero worker’s union has not helped matter either.

There are ample signs that the airline will not survive the next three years if the ownership feud between the Ibru family and Asset Management Company of Nigeria (AMCON) is unresolved. There is no visible indication that the battle will ever cease.

AMCON’s decision to appoint Tunde Fagbemi as the chief executive officer of aero is another grave mistake that will exacerbate a very bad situation. If Fagbemi’s antecedents should be a point of reference, nothing good will happen to the airline. Aerocontractors will surely dive into insolvency, no matter how much restructuring, funds are pumped in.

Aero Contractors was formed in 1959 and officially registered in Nigeria in 1960. At that time, it was wholly owned by Schreiner Airways B.V. of the Netherlands.

It became a company with initially 40 percent Nigerian holding in 1973 and subsequently 60 percent in 1976, anticipating the requirements of the Nigerian Enterprises Promotion Decree of 1977, also known as the indigenization decree. In January 2004, Schreiner Airways was bought by CHC Helicopter (CHC), which acquired a 40% holding in Aero, while the 60% majority share remained within the Ibru family.

On 1 July 2010, CHC sold its interests in Aero for the consideration of one Naira, when Aero became wholly owned by the Ibru family.

In March 2013, industrial action grounded flights for 18 days, in a dispute over outsourcing and reduction in staff numbers. The strike, from 13–28 March, grounded Aero’s active fleet of nine aircraft, and was reported to have cost the airline at least N10bn in ticket sales.

After financial intervention, the Asset Management Company of Nigeria (AMCON), an arm of the Federal Government of Nigeria, held 60 percent of Aero, and in August 2013 it was reported that AMCON had taken over the management of the carrier. Hugh Fraser was named as new CEO.

In August 2013 there was press speculation that the Federal Government will use Aero Contractors as the nucleus of a new national carrier, recapitalizing it through a N200 billion initial public offering (IPO). The new airline was allegedly to be known as ‘Nigerian Eagle’, several years after the liquidation of the defunct flag carrier Nigeria Airways, and that the airline would commence full operations before the end of the year (2013). The factual basis for this report was the repainting of the aero plane in the colour of the Nigeria national football team, the Super Eagles. The Ministry of Aviation, however, clarified the repainting of the aircraft was only publicity related to the qualification of the National team for the 2014 World Cup.

With this pedigree, it is highly disheartening to witness the potential end of a once giant and enviable aviation company.

Although the Ibru family has been involved from the start, they are equally responsible for all the troubles in the company, and probably, the terminal end of aero. From over inflation of used seven B737-400 & 500 series aircraft, to outright cash withdrawal through fictitious contracts, there is no feasible, profitable way for the carrier to remain operational.

AMCON’s financial support, naturally, would have salvaged the airlines demise if a competent and honest management team was in place. Mrs Ibru’s children took total control of the affairs, with uncaring, fraudulent intent. At will, they embezzled and misappropriated the fragile revenues.

The general misconception that airline business is profitable, judging purely from cash receipts from sale of tickets overshadowed the Ibrus’ glare of the true state of aero’s financials.

Another unhealthy situation with aerocontractors was the incessant board room politics created by the Ibru family to sustain a strong hold to keep milking its resources. In less than three years, aero changed four to five of its managing directors. This was a clear sign of instability orchestrated by the Ibru family, who would dislodge any disloyal head of the company. Captain Akin George’s dedication to serve the airline with protective guards was thwarted because all his actions checkmated the greed and absolute authority of the first family of aero.

The backlash of it all was the regular reactions from the employee union of pilots and engineers, even flight attendants had their moment in the equation. There is nothing more damaging to an airline’s operation than irate crews.

The carrier’s adventure into schedule services would have been profitable if the goal was to maintain a world-class airline capable of sustaining itself. Greed and impatience through various unhealthy loans of Oceanic bank, another company of the Ibrus, clearly led to uncontrollable indebtedness of the company. The huge debts warranted AMCON’s involvement in the first place.

Combining all these factors, it was only a matter of time for aero to nose-dive.

Since the directors of the company cared less for its survival, the rational thing to do was for the main financier, AMCON to takeover. Aero’s loan of over N20 billion bought over by AMCON was never serviced; and with ageing airplanes, the future of the airline was in absolute doubt.

No one can challenge the asset company of Nigeria as the true owner of the company, since its equity in the company stands above 65 percent.

The true value of aero’s assets as of today is less than N6billion. All the equipment it flies cannot exceed N4 billion in a realistic, professional valuation.

What is quite unpleasant about the recovery or takeover of the airline by AMCON is the appointment of Tunde Fagbemi to manage it. He has no solution to revive the ailing carrier, no matter how much money is reinvested in the company.

It is harder to reengineer an airline in trouble than to bring a dead soul to life. This is probably the end of aerocontractors.
http://www.leadership.ng/columns/500840/the-end-of-aerocontractors

Very Informative

That is why people should not play politics with their business.

Hundreds of passengers of Aero Contractors Airline were yesterday stranded at the Murtala Muhammed Airport Domestic Terminal, MMA2, Lagos, due to the inability of the airline to buy aviation fuel otherwise known as JET A1 for its aircraft to ferry it’s passengers to their various destinations. Vanguard gathered that the airline could not fly because of its indebtedness to suppliers of JET A1 who were not ready to grant it further credit facility . The situation started very early in the morning up till around 2:00pm when the passengers became restive. This is coming barely three weeks after AMCON took over the running of Aero Contractors Airline. Most of the passengers nearly traded punches with the ticketing officers. At a certain point, ticketing clerks fled the counters for fear of being manhandled by the passengers.

Read more at: http://www.vanguardngr.com/2016/02/aero-contractors-passengers-stranded-at-lagos-airport/