Aviation: Nigerian ground handling firms count revenue losses.

Major ground handling companies in Nigeria are facing a revenue crisis following published results in the first nine months of 2020. Reports from two of the major listed ground handling companies listed on the Nigerian Stock Exchange, reveals a revenue decline of over 20%, due to a fall out of the COVID-19 induced lockdowns and travel restrictions.

The state of their financials led some of them to consider job cuts, and cost reduction measures in a bid to survive even after the lockdown were eased.

Since the breakout of COVID-19 in March 2020; the FG approved lockdown in Abuja and Lagos State, both international airport hubs, forcing most airlines to shut down operations. This further affected the operations of the ground handling firm, as the government sought to contain the spread of the virus.

Aside from the COVID-19 pandemic dilemma, the sector was also affected by the activities of #EndSARS protesters that blocked the entrances of the Lagos airport to express their grievances against police brutality and extortion in the country.

The companies are Skyway Aviation Handling Company Plc (SAHCO) and the Nigerian Aviation Handling Company Plc (NAHCO). Their combined revenue for the nine-month period ended September 30 dipped by N2.7billion to N10.1bllion from N12.8billion in the same period of 2019.

According to their financials, the drop represents a 21% reduction in revenue in the period under review.

NAHCO

  • Revenue for the first nine months of the year dipped by 29.8% from N7.4 billion to N5.2billion.
  • A loss before tax of N76.1 million for the nine months of 2020, as against a profit before tax of N973.1million in the corresponding period of 2019.
  • A loss after tax of N65.9million for the nine months of 2020, as against a profit after tax of N782million in the corresponding period of 2019.
  • Less income for passenger/aircraft handling for the first nine months of 2020 compared to the same period in 2019.
  • Passenger/aircraft handling for the nine months of 2020 was N1.7billion compared to the N4.1billion recorded for the same period of 2019, representing a revenue reduction of 56%.
    • It recorded a revenue decline of N4.9billion for the first nine months of 2020, as against N5.4billion recorded within the same period in 2019 – a drop of 9%.
    • Profit before tax stood at N549million, compared to the N599million recorded in 2019.
    • It recorded N318.8million profit after tax for the first nine months of 2020, compared to N341.8million in the corresponding period of 2019. This represents a decline of 6.7%.
    • Revenue from foreign handling dropped to N605.6million from N950.4million.
    • Revenue from domestic handling was down N278.9million compared to the N447.7million recorded for the same period of 2019.

    What they are saying

    Country Manager, Nigeria & West Africa, Qatar Airways, Kennedy Chirchir, explained that the state of the sector is the result of the new normal of the industry, which means a total paradigm shift.

    He said, “We are moving to the digital space where physical interaction would be reduced drastically. Most of the operations will be on a digital platform. There will be more requirements in terms of the turnaround of aircraft. Before now, it takes about 1 hour for aircraft to turnaround, but now it may take as long as 2 or 3 hours because there would be stricter checks. These will happen but will not stop people from travelling and that means the future is bright for the sector.”

    On the part of travel agencies, Managing Director, BTM Travels Limited, Lola Adefope, explained that the adoption of technology would be emphasized. Before this, she insisted that it was important for operators and regulatory authorities to ensure that right policies and processes were in place to drive the technology, else the nation would be placing the cart before the horse.

    “What we need to do is to implement a proper education process and platform. That is to ensure people understand the risk of travel and the safety measures in place with the technology to support the process. The technology will push notifications to people directly.“We are going to see a move to much smaller groups when it comes to actual leisure travel. Leisure travel won’t develop at the international scene immediately, but we have to develop domestic tourism. We must put in place policies and processes before we open our borders for intercontinental or international tourism,” she said.

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