Seinde Fadeni is the Chairman of the Board of Nigerian Aviation Handling Company PLC (Nahco Aviance). In this interview with IFEOMA OKEKE-KORIEOCHA, he speaks on factors behind its stellar results which was announced at the 42nd AGM of the company. He also hints at the future outlook.
What are the highlights of the stellar results which you announced at the AGM for the financial year 2022?
Our company, just like the industry, remained resilient, performing admirably and achieving some significant milestones thereby delivering value to our distinguished shareholders. Our group revenue for the year 2022 was N16.7 billion, a 63 percent increase from the previous year’s figure of N10.2 billion. This was due to a combination of factors including the increase in aircraft handling rates, onboarding of new routes by some loyal clients such as Qatar Airways expansion into Kano and Abuja routes; Ethiopia Airlines’ addition of the Enugu route to its destinations; Air Peace’ commencement of Port Harcourt – Cameroon route; the expansion of our excellent services, improved efficiency in our operations and increased reliance of our clients on our ability to deliver. All these contributed to the positive results.
In the year 2020 when we had the COVID-19 pandemic, the prediction by most stakeholders especially in the aviation industry was that it would take about four years for the industry to recover fully, but as of last year, most organisations in Nigeria, including the handling companies have recovered fully from the crisis, what do you think aided the fast recovery rate?
It is a matter of strategy, and the support of our stakeholders, especially our customers; and the upgrade of our excellent service. So, it is doing what we think is the right thing and doing it well. No doubt about it that the tariff also helped us. For a long time, we have been charging less than other West African and Africa countries’ prices, which even made it impossible for us to live up to expectations in terms of equipment and other things; to run the business, including providing our staff with excellent welfare, increasing our manpower and other commitments. So, the increase in tariff helped to some extent.
The quick recovery rate from COVID happened in almost every part of Africa and not just in NAHCO alone. In that year of COVID, Ethiopian Airlines declared a profit of over $1 billion and it was just a strategy. When some other airlines parked their planes, and they were using them for restaurants, Ethiopia turned their planes into cargo. There was serious cargo movement, but it didn’t stop, and we are part of the people that made money out of that massive cargo movement.
So, COVID had an impact on us but we recovered quickly. What we also did strategically at the time was that for some of our staff who were not essential workers, and who were at home, we were paying them about 50 percent of their salaries. Because this is a skill organisation, we spent so much money training them. So, for you to get another set of people, it will take you a lot of time and resources to train them. So, what we did was to ask them to stay at home as most organizations did, but in our case, we were paying them. What we just removed from their salaries were transport and some other allowances. It was just strategy and doing the right thing and making sure that we reduced our costs. That is why we were able to overcome these challenges.
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Can you say cargo freighting by air has a great future in Nigeria?
Cargo is more time bound and it continues to happen all over the world. When it comes to Africa or our country, you will find out that we are more or less losing out in Nigeria compared to other places like South Africa and countries like Ethiopia. Our freight is so small. For example, in Nairobi, Kenya, every Boeing 737 plane leaves the city with flowers to Europe and other countries. At the end of the day, you just find out that the effect has not gotten to Nigeria. However, I believe that with the new administration, they want to retool the economy and I believe that this will also aid air cargo volume. Because once there are activities and the economy is running well, everything will run smoothly. President Bola Tinubu has also said that there is going to be a unified exchange rate. So, this has had a lot of impact on cargo importation whether it is sea freight or air freight. But, with these new economic policies, which we all know that by the grace of God, he will live up to, there is going to be an increase in cargo movement.
What are the impediments to your operations aside from regulations and taxes?
I will also rely on what you said because those are the basic issues. Sometimes, there is multiple taxation. One of the major issues is that 95 per cent of our equipment, if not 100 percent, is bought with foreign currency. So, we have not had good access to foreign currency. We can’t even try to take a loan because we won’t survive it. The interest rate is not good for any business in Nigeria. We are almost at 26 per cent per annum. How do you want to do it to make that kind of money to pay back?
Those are the challenges. For example, what the Federal Airports Authority of Nigeria (FAAN) charges us is five percent of our revenue. It shouldn’t be five percent of our revenue; it should be five per cent of our profit. Because if you are charging me five percent on revenue, which means you are also charging the money we paid to our staff.
If I want to request land for expansion from the Federal Airports Authority of Nigeria, (FAAN), my landlord, I will have to pay for it and yet you are taking five percent of my total revenue, not profit. That is not good for us.
How has the forex scarcity affected your operations?
Remember at a point in this country, a dollar was N150. Some of our equipment is up to 700,000 Euros; some are up to 500,000 Euros. Some are 300,000 Euros. So the money you would have used to buy four pieces of equipment is used to buy just one. And the unfortunate thing is that it is not like you can even get it on the shelve; you have to wait for it. To even get the dollar is a problem; it is not available. That is the problem. It is high and it is not available.
NAHCO was one of the companies that embraced the Free Trade Zone. Would you say that you are benefiting from it?
I won’t say that we have not benefited from it, but it has not gotten to where I expected it to be. Right now, we have some investors who are coming to us from the Middle East and the United States. So, we want to take advantage of the free trade zone. The beauty of it is that Nigeria can act as the hub for West Africa and since it is just coming in and it is going out, then you don’t need to pay any customs taxes.
We are working seriously on it; that is why I said I won’t say we have not benefited from it. However, it is not up to 20 percent of what I expected.
Outside the country, the handling companies have leasing companies that give them equipment, while they also collaborate, is NAHCO thinking along this line?
This is a fantastic idea, and just like you rightly said; abroad, it is easy to lease and it is just like what happens in housing. I know some of the oil companies like Shell do not buy outrightly; they lease. Abroad, you don’t need to buy a house, you mortgage because the interest rate on some of these things is very low. But, even if you want to do leasing in Nigeria on equipment, the guy goes to the bank, he takes money at 25 per cent and then he leases it. How much does he want to lease it to you? So, these are some of the challenges.
But I also appreciate the fact that you said we should come together and form a leasing company, which can lease to both of us. We have also been speaking to ourselves about this kind of arrangement. But the major challenge is what I have told you. If you want to lease and you take money from the bank at 25 per cent, you buy the equipment and you give it to us, how much do you want to lease it to us? These are some of the challenges. It will kill us. To declare profit is good, but by the time you turn the whole profit into dollars, how much does it come to? All the shout about good profit just divides it by the dollar. Today, it is N770 to a dollar. So, it is basically about demand and supply, it is what is available that is driving it. So, these are some of the things we also want to talk to the new government about.
You had a very stellar performance in 2022. Going forward, how do you intend to sustain this tempo in 2023?
I am very confident that we will do better than what we did in the past year in 2022. We are there already. We have our first quarter (Q1) report, and I am sure we have it in the public domain. So, I don’t have any doubt that we will surpass what we did in the 2022 financial year and what we have also done is that we have tried to retool our system by cutting costs. We are trying as much as possible to make sure that there is no waste in the system. And for every kobo we earn, we want to see what it brings out from whatever we use it for. So, I am very confident that we will do better.
