Nigeria's Arik Air is in receivership due to its inability to pay workers and creditors, prompting the government to take control of the country's biggest airline, state-owned "bad bank" AMCON said on Thursday.
Arik, which was founded a decade ago and is now west Africa's biggest carrier by passenger numbers, has struggled with debt amid a currency crisis in Nigeria, as customers are invoiced in naira but fuel suppliers are paid in dollars.
In 2012, a central bank document showed Arik owed 85bn naira ($279m) to the Asset Management Corporation of Nigeria (AMCON), set up by the state in 2010 to stem a financial crisis. AMCON had taken on more than 132bn naira of debts from 12 Nigerian airlines, including Arik.
"Arik Airline has been in a precarious situation largely attributable to its heavy financial debt burden, bad corporate governance ... that required immediate intervention," AMCON said in a statement.
Arik declined to comment.
The airline, which handles more than half of domestic air traffic in Nigeria, flies across Africa's most populous nation and to London, New York and Johannesburg.
AMCON said Arik had temporarily suspended its operation to New York and grounded more than eight other planes, adding that the airline had also suffered from non-payment of leases. AMCON said it had appointed a new team to manage Arik, supervised by a receivership manager.
The airline had been planning a private share placement to raise as much as $1bn and then a possible initial public offering in Lagos and London, its managing director said in October.
Arik had wanted to expand internationally both to bring in more hard currency, as well as to cushion the impact of the economic slowdown at home, and was looking for new investors to help it grow rather than using debt.
Nigeria, Africa's biggest economy, faces its worst recession in 25 years, brought on by the fall in oil prices, which has also triggered the currency crisis.
Some international carriers such as United Air Lines and Iberia have cut or stopped flights to Nigeria because those services are no longer profitable.
Others have complained about the difficulty of repatriating millions of dollars worth of fares sold in naira.