Family Disagreement Puts Aero Conversion Into National Carrier In Jeopardy

 

Squabbles among members of the family of the scion of the Ibru business dynasty, Chief Michael Ibru, as to who controls the 40 per cent minority shares in Aero Contractors is stalling the take-off of the national carrier, investigations have revealed.

It was gathered that the disagreement, which has turned into a legal battle between the two factions of the family, has put on hold the Ministry of Aviation’s discussions with the airline on its emergence as the national carrier.

The warring factions comprise the older offspring of Michael Ibru led by Oscar and Peter Ibru and others born by his first wife, and the children born by his second wife and former Managing Director/CEO of the defunct Oceanic Bank Plc, Mrs. Cecilia Ibru.

The older siblings have accused Cecilia Ibru and her children of sidelining them in the running of the airline over the years and have gone to court to establish the real ownership of the shares of Aero Contractors.

However, THISDAY gathered that the Asset Management Corporation of Nigeria (AMCON), which acquired 60 per cent of the share of the airline after it took over its non-performing loans (NPLs) from the balance sheet of Oceanic Bank and converted them through a debt-equity swap, is making moves to bring both parties to the table to resolve their differences to speed up the take-off of the proposed national carrier.

The two factions of the Ibru family are pitted against each other over the control of the airline, which their patriarch established over 50 years ago.

On the resolution of the family squabble, AMCON has resolved to give the feuding siblings time to reach an agreement that would enable the Ministry of Aviation to take a final decision on Aero as the national carrier.

If this is agreed, a ministry source said AMCON and the warring factions would sign a tripartite agreement stating that whatever the outcome of their court case is, it would not be prejudicial to the existence of the national carrier.
“Both sides have been contacted on this by AMCON and they have agreed to signing the contract that would shield Aero as the national carrier from the outcome of their case.

“So if it is established by the court that Cecilia and her children own 40 per cent of Aero or the older children own the 40 per cent, or it should be evenly split between both sides, this judgment would not in any way impair the airline as the national carrier.

“Once they sign off on this, it would give the ministry the comfort it needs to finalise arrangements with Aero as the national carrier. We hope that this agreement would be signed very soon,” the ministry source said.

Under the arrangement, the source further revealed that AMCON has also accepted to give a board seat to the contending siblings, represented by Peter Ibru.
Right now, only Cecilia Ibru’s side of the family has representation on the Aero Contractors board.

The selection of Aero Contractors as the national carrier is underpinned by the fact that AMCON, a federal government institution, already holds 60 per cent stake in the airline.

The national carrier would have been unveiled during the last Independence Day celebration on October 1, 2013, but the plan was shelved to get more time to find an amicable resolution of the family dispute.

Under the arrangement for the new national carrier, the federal government will retain 60 per cent through AMCON, while Legacy Holdings, a company owned by the Ibru family, will hold 40 per cent.

Sources said AMCON would only hold on to its 60 per cent shares in Aero Contractors for three years, after which they would be sold to the Nigerian public via an initial public offer (IPO).

Aero Contractors as the national carrier would benefit from a code share arrangement with other international airlines, as this would improve Nigeria’s ability to take advantage of the Bilateral Air Service Agreement (BASA) it has in place with other countries, as well as commercial agreements, which will enable it to compete favourably with other reputable airlines.

Other benefits the new national carrier stands to gain include the construction of a new terminal and the acquisition/purchase of 12 new planes for its regional and domestic flights.
The establishment of the national carrier had suffered multiple setbacks in the last two years, as government’s plan to partner foreign carriers, Lufthansa and Air France, failed.

Opposition has also come from the National Assembly, while some stakeholders, who are yet to get over the failure of the defunct Nigeria Airways, have kicked against the establishment of a national carrier, fearing that it could go the way of its predecessor.

In addition, Arik Air, which has been the dominant operator in the Nigerian air space, is known to be very uncomfortable with the emergence of Aero Contractors as the national carrier.

Sources in the industry said that Arik has been lobbying in and around government to ensure that the national carrier does not see the light of day.