Arik Air’s Debt Hits N455 Billion As Airline Faces Possible Liquidation Amid Alleged Fraud Case

• Since Arik Air fell into financial woes in 2017 and was taken over by the government, it has been a case of going from bad to worse
• The over N300 billion debt at the time is now closer to half a trillion naira, and the airline is still unable to meet payment obligations to the many debtors
• Details have now emerged about the prolonged debt situation, and a possible N79 billion fraud case that may have happened in the interim

Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.

A notable Nigerian airline, Arik Air, may soon face liquidation due to its mounting debt.

The Asset Management Corporation of Nigeria (AMCON) confirmed that Arik Air has been uncooperative in repaying its debts, which run close to half a trillion naira.

Legit.ng listed the debts to include N227,637,469,394.34 (N227.6 billion) owed to AMCON, N163,502,837,397.75 (N163.5 billion) owed to Rockson Engineering, and N14,031,457,980.71 (N14 billion) owed to Ojemai Farms.

A former executive director at AMCON, Abbas Jega, provided details of the matter while testifying at the Special Offences Court in Ikeja, Lagos, presided over by Justice Mojisola Dada on Wednesday, June 4, 2025.

AMCON director gives insight into Arik’s debt

The federal government took over Arik Air in February 2017 due to its massive debt profile, exceeding N300 billion.

The management team was dissolved, and the government appointed a receiver manager through AMCON. There was also a directive from the Central Bank of Nigeria (CBN) for banks to transfer non-performing loans to AMCON.

In his testimony, Jega explained that this decision was justified because the amount involved had caused one of the creditors, Union Bank, to exceed the single obligor limit set by the apex bank.

AMCON would later discover that the bank had converted Arik’s guarantee into a loan and pushed it to the corporation to repay.

Jega was giving his testimony as the third prosecution witness in the ongoing trial when he said:

“It was a guarantee given to some foreign lenders that in the event Arik died or burned out, Union Bank will pay the installments. When we came back to Nigeria, we invited the Union Bank to explain why AMCON should pay for the guarantee.

“At the end of the deliberations, AMCON agreed with Union Bank that the money paid should be returned to AMCON, so that if Arik does not pay any installment, AMCON will make the payment on behalf of Arik. We (AMCON) invited Arik to resolve the issue with Union Bank.”

Arik Air restructures loan payments with AMCON

Despite initial aversion to discussing the loan situation with AMCON, Arik Chairman Johnson Arumemi-Ikhide eventually signed agreements to restructure the loans, with AMCON providing the airline additional working capital.

This increased Arik’s debt to AMCON, and the airline still defaulted on loan obligations, Jega explained.

He said;

“Since AMCON took over Arik, it stopped performing because the nature of the facility had changed, and Arik was not amenable to that change. It was unable to source its working capital from the money market. This complicated both the relationship between Arik/AMCON and the ability of Arik to honour its obligations.”

He disclosed that they explored several options, including a debt-equity swap where AMCON would become a shareholder in the airline and the owners would give up some equity, but Arik Air declined.

Another option was to give AMCON management control and financial oversight by letting them appoint the MD and CFO, but implementation dragged on till Jega left AMCON in 2015.

Arik Air faces liquidation amid N79 billion fraud case

The Economic and Financial Crimes Commission (EFCC) initiated the ongoing case on January 20, arraigning Kamilu Omokide, receiver manager of Arik Air, (first defendant); Ahmed Kuru, former managing director of AMCON (second defendant), Roy Ilegbodu, managing director of Arik Air, (third defendant); Union Bank Plc (fourth defendant) and Super Bravo Limited (fifth defendant).

The defendants were accused of defrauding Arik Air (still in receivership) of N76 billion and $31.5 million.

During the cross-examination, Jega said Ilegbodu and Omokide were not part of the loan transfer arrangements or the London meeting with Arik’s foreign lenders.

He confirmed that at the time of his exit from AMCON in 2015, Arik Air had incurred over N100 billion debt to the corporation, in addition to existing loans from Union Bank, Keystone Bank, and Zenith Bank (which was later purchased to increase the debt to AMCON).

Jega also said that the airline was unable to pay the huge debts due to overstretched capacity.

The matter has been adjourned to June 30, July 1, and July 2, 2025, for the continuation of Jega’s cross-examination.

Arik Air enjoys high passenger traffic

Amid all of the drama, Arik Air still ranked among the airlines with the highest number of passengers in Nigeria.

Legit.ng reported that Arik Air emerged as the second-largest carrier in 2024, carrying 2,239,197 passengers within 12 months.

A report by the Nigerian Civil Aviation Authority (NCAA) shows that Air Peace emerged as the Nigerian airline with the highest domestic passenger traffic in 2024, while Qatar Airways led on the international route.

Proofreading by James Ojo, copy editor at Legit.ng.

Source: Legit.ng