Investors and the management of Medview Airline are busy searching for a formula that will make the firm return to profitability, following N1.53 billion losses the company posted as at the end of the nine months ended September 2018. From gross revenue to profit after tax, no one is left in doubt that Medview Airline is in urgent need of a turnaround, the analysis of its nine months unaudited report ended September 30 2018 shows.
Gross revenue for the period crashed by 73 percent to N7.85 billion compared with N28.77 billion it made in similar period in 2017. Traditionally, the company made its revenue from three sources which were hajj operations, domestic operations and international operations. The withdrawal of some aircraft from international routes for schedule maintenance and reconfiguration cost the firm a sizable part of periodic revenue.
Between July and September 2018, Medview Airline recorded no sales in international operations following its earlier decisions to cancel international operations which the company attributed to scheduled maintenance and cabin reconfiguration of some aircraft in its fleet.
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Operating costs in nine months of 2018 stood at N7.31 billion, representing a 70 percent decline compared with N24.23 billion incurred same period in 2017. But when compared with revenue, it cost much more for the airline to generate revenue in the nine months of 2018 as against same period in 2017.
During the period, operating cost as a percentage of revenue was 84 percent from January to September 2017, as against 93 percent during the same period in 2018. By implication, N93 was expended to generate N100 by the company in the first nine months of 2018 compared with N84 in similar period in 2017.
“Medview Airline had lot of issues. They took some aircraft for C check and the London and Dubai routes did not take off. It was the inflows from the Dubai routes that boosted earnings in the previous years. The company pulled out of the London route because it wasn’t able to maintain consistency on that route. And competitiveness in customer service is missing in the Nigerian domestic routes”, Tayo Ojuri, managing director and chief executive officer of Aglow Aviation Support Services Limited said.
Gross profit for the period fell by 88 percent to N534.57 million in 2018 in contrast to N4.55 billion in similar period in 2017. Medview Airline reported a loss before tax of N1.45 billion for the period as against a profit before tax of N1.36 billion in similar period in 2017. Loss after tax for the period was at N1.53 billion in contrast to profit after tax of N1.19 billion as at the end of September 2017.
On what the firm should do to return to profitability, Ojuri suggested its management should align with a competent technical partner that would bring in the desired funds and expertise.
“The way out is to have technical partnership that will bring in foreign inflows. The foreign inflows will help reduce the high cost of borrowing locally. The technical partners will ensure good governance, best global practices and ensure competitiveness in the market”, Ojuri said.
Some few months back, the company announced the disengagement of some employees in a bid to save cost.
“In the course this exercise, some staff, about sixty in number were required to step aside as a result of downsizing with a genuine intention to recall them back as soon as the situation improves as stated in the letter to the affected staff”, Medview management stated in a note to the Exchange in October.
That decision paid off in the third quarter of 2018 as administrative expenses fell by 56 percent from N1.21 billion in between July and September 2017 to N537.5 million in between July and September 2018. In particular, staff cost, medical, training and welfare declined by 42 percent from N517.8 million to N300.6 million during the same period. The company also reduced its advertisement, professional and business development costs to a minimal level during the period.
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