Shareholders of Arik Air Limited have filed a N20bn (about USD$55 million) lawsuit against the Nigerian Government and Ethiopian Airlines over negotiations between the two for an Arik takeover. The suit was filed by the airline on September 6. In the suit, Arik asked the court to prohibit the two other parties from further negotiations

“The plaintiff avers that the agreement of the first defendant will be wide ranging and intricately affect every aspect of the plaintiff herein, including but not limited to the day-to-day running, technical as well as financial management, which will affect the plaintiff, being the largest domestic and regional airline in Nigeria,” said Chris Ndulue, a director of Arik. “The plaintiff further avers that the action taken by the first and second defendants will have a negative effect on the country’s image as the plaintiff, being the largest airline, will be owned over to another country for management. The negotiations had caused undue hardship and irreparable damage to the Arik Air brand and ongoing investment discussions as well as unbearable distress to the airline’s shareholders and directors.”

An Arik Air 737. Arik has been the flag carrier of Nigeria since previous flag carrier was liquidated in 2012.
Photo Source: Wikimedia Commons

“Ethiopian had owed huge debts in the past, which with the support of its own government, had been defrayed; even currently, it still owes huge debts,” said Senator Anietie Okon, the former Vice President of Arik Air. Okon asserts that Ethiopian often “[indulges] in unethical behavior”.

Arik argues that the Ministry of Transportation has no power to transfer management while the suits are pending, and asks the court to void negotiations altogether. Arik also asked the court for an order directing Nigeria’s attorney general to ensure the investigation of Ethiopian by the appropriate authorities for interfering in the “administration of justice”. In addition, Arik requested that the court compels the Inspector General of the Police to investigate the actions of Ethiopian in the matter.

Ethiopian confirmed that it was in talks to take over Arik last summer despite rejecting to invest in the airline at the end of the winter.

“We have outlined our terms and conditions to the Nigerian government and we are waiting to see if they agree,” said Esayas WoldeMariam, Managing Director of International Services at Ethiopian Airlines, after announcing Ethiopain’s bid to purchase Arik. “We are capable and desirous of handling the airline.”

Arik Air, Nigeria’s ‘interim’ flag carrier, has been under the control of the government through its Asset Management Corporation since February. No date has yet been set for the case to be heard.

Featured image from Wikimedia Commons

Categories: Industry Talk