The year 2018 is a period the Nigerian aviation industry represented on the Nigerian Stock Exchange (NSE) cannot forget in a hurry, as they slipped into a loss zone following a decline in revenue which was the first of its kind in the last 5 years, BusinessDay analysis show.
An industry-based analysis of 3 aviation companies listed on the NSE revealed net income slid by N13.07 billion to record a net loss of N10.82 billion during the period halting growth in income since 2016.
Also, revenue plunged 49 percent to N25.52 billion in 2018 against N49.74 billion recorded in 2017 also halting a consistent growth in revenue since 2014. This saw the industry’s annual average growth rate slow to 3 percent from 9 percent as of 2017.
Industry watchers say the travails of domestic airlines include funding, the impact of economic downturn, the naira to the dollar exchange rate, unfriendly regulations, cost of aviation fuel as well as low infrastructures,
These problems have been there for long and are the causes of several domestic airlines closing shop. Some of these airlines include Tat Nigeria, Max Air, Discovery, Kabo Air, Harka Air, Donair Aviation, Association Aviation, Allied Air and recently, FirstNation and Aero contractors.
Ali Magaji, Aviation finance consultant said there are significant challenges for the industry as a whole to find finance for the new deliveries.
“Today, most of the airlines owe Asset Management Corporation of Nigeria (AMCON) substantial amount of money beyond the capacities of their balance sheets, which reveals that it is getting increasingly difficult for investors to source financing options,” Magaji said.
Weighing on the Aviation industry performance according to analysis is the significant loss after tax of Medview Airline plc in 2018.
Medview recorded a loss of N10.35 billion in after-tax profit after recording its first billion profit in 2017 (N1.25bn), showing the airline’s dire straits.
Recall that the airline pulled out of the London Gatwick and Dubai routes last year after a brief stint in the international market, citing harsh local operating environment, aircraft leasing programme that went awry and aggressive aero politics.
Also, between November 2017 and June 2018, the airline laid off a huge chunk of its workforce especially the outstation offices.
BusinessDay checks show Medview suspended its operations as all its aircraft have gone out of maintenance.
Sources close to the airline said the development may be connected to the airline’s only operating aircraft B737-500, suddenly going out of service.
Skyway aviation handling company plc on the other hand during the period slid into a loss of N665 million in 2018 amid a 26 percent growth in revenue to N6.13 billion against N4.85 billion in 2017.
Amongst peers NAHCO remains the most traded stock on the exchange however the last five years have seen shareholders value eroded by 47 percent, hence losing N3.40 billion.
The aviation sector in Nigeria, as elsewhere, is pivotal to the transportation system and as an important “gateway” to the outside world, the sector’s contribution to the economy cannot be downplayed.
The National Bureau of Statistics reports an average annual output of $179 million in the last four years. The analysis shows the sector has grown by a Cumulative Average Growth Rate (CAGR) of 3.99 percent, which is faster than the broader economy with an average of 0.28 percent in the same period.
Nigeria’s aviation sector features (20) airports and many regulated airstrips and heliports; 23 active domestic airlines; 554 licensed pilots; 913 licensed engineers and 1700 cabin personnel, according to the Nigerian Civil Aviation Authority (NCAA).
In comparison, Africa has 731 airports and 419 airlines with an aviation industry that supports around 6.9 million jobs and $80 billion in economic activity, data shared at the 2019 World Economic Forum suggest.
DAVID IBIDAPO & SEGUN ADAMS
