Ethiopia Airlines is in negotiations to take over Arik Air, Nigeria’s largest airline.
An official from Ethiopia Airline has confirmed that the East African carrier is “willing and able to take over the management of Arik Air,” AP reports. Over the past year, Arik has been plagued by financial troubles which culminated in a government takeover back in February. Ethiopia’s takeover negotiations started following a request by Nigeria’s aviation ministry, AP says.
The takeover was attributed to Arik Air’s “heavy debt burden,” which left it unable to pay salaries and aircraft leases. The first public sign of trouble came last September when, due to insurance debt problems, the airline temporarily shuttered operations for a full day, leaving travelers stranded across the country. Nigeria’s government claimed its takeover would prevent job losses and protect investors.
Arik Air’s troubles have also been linked to Nigeria’s flailing economy which has particularly hit the country’s aviation industry. Citing Nigeria’s foreign exchange shortage which made it difficult to repatriate dollar profits at the time, America’s United Airlines pulled out of Nigeria in May last year while Emirates Airlines cut down on local operations last October. Local airlines have also struggled with jet fuel shortages with importers unable to maintain supplies amid the dollar crunch. The situation forced Aero Contractors, Nigeria’s oldest working airline, to suspend operations indefinitely last September.
Ethiopia’s fortunes have been much better. While other major carriers on the continent have struggled, Ethiopia Airlines has grown 25% per year to become one of Africa’s largest airlines. In 2016, it recorded profits of $265 million.