Arik Air shareholders drag federal government to court in bid to stop Ethiopian Airlines takeover

ARIK Air's shareholders have filed a N20bn ($55m) lawsuit against the federal government and Ethiopian Airlines over recent claims of ongoing negotiations between the two parties over a planned takeover of the airline.

Last month, the Asset Management Corporation of Nigeria (Amcon) revealed that talks have commenced with Ethiopian Airlines to purchase the troubled Nigerian carrier Arik. It was seen as part of an ambitious plan to build Africa's largest airline that would serve all parts of the continent and link it with the rest of the world.

Arik has been in serious financial difficulty over recent years and in February this year, it was taken over by the federal government via Amcon, having chalked up huge debts, which totalled over N300bn ($833m). In contrast, Ethiopian Airlines, 100% owned by its government, is a hugely successful operation, flying to 101 destinations.

In response to the ongoing negotiations, Arik's shareholders have instituted a suit at the Federal High Court, Lagos. Filed by their counsels Babajide Koku, Chukwuemeka Nwigwe and Ezinne Emedom, the suit named Ethiopian Airlines, the Federal Ministry of Transportation and the attorney general of the federation  Abubakar Malami, as defendants.

In a statement of claim supported by a 20-paragraph affidavit deposed to by a director of Arik Air, Chris Ndulue, the airline asked the court to stop the first and second defendants from further negotiations for the takeover of the carrier. Mr Ndulue stated that Amcon had taken over the airline on February 8 and was challenged by the erstwhile Arik management through two suits already pending before the Federal High Court, Lagos, adding that the negotiations by the defendants would distort the outcome of the pending suits.

His lawyers said: “The plaintiff avers that the agreement of the second defendant with 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. 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 pawned 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.”

Senator Anietie Okon, the former vice president of Arik Air, on behalf of the shareholders, said Ethiopian Airlines was indulging in unethical behaviour and conspiring with some people in the government to take over Arik. “Ethiopian had owed huge debts in the past, which with the support of its own government, had been defrayed and even currently, it still owes huge debts,” he added.