Medview falling ‘out of the skies’ as financial trouble heightens

Two years after listing on the Nigerian Stock Exchange, one of Nigeria’s leading aviation company, Medview Airlines is being dominated and about falling out of the skies due to its dwindling fortunes.

The company which posted revenues of about N36.9bn and a profit after tax of about N1.2bn in 2017, had things went south barely two years after with revenues tumbling down by over 74% to 9bn in 2018.

A breakdown shows that apart from its Hajj operations with a gross profit of N758 million, International and Local operations posted gross losses of N2.2 billion and N1.4 billion respectively.

Revenue from its international operations fell from N13.8 billion to N2.8 billion while local operations fell from N14.8 billion to N3.6 billion. The company also made provision for bad debt of over N2.5 billion.

In a nutshell, the company made an N10.3 billion loss after tax in 2018, as against a N1.2 billion profit after tax in 2017.

So, while the market cap is still about N17 billion, the company is worth just less than zero in 2019. Net Assets have not gone from N7.3 billion in 2017 to negative of N4.1 billion at the end of the first quarter of 2019.

Medview’s main lender is First Bank Ltd to which it owes about N1.5 billion. It also banks with Zenith, GTB, FCMB and Ecobank. Medviews main creditors are its trade partners which it owes about N14 billion (it was N6.9 billion in 2017).

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Investigations shows that the company will either need to raise capital as soon as possible or face imminent liquidation from its lenders.

According to the Chairman of the airline, Sheik Abdul-Mosheen Al-Thunayan, the extremely tight market liquidity as well as the depletion of its aircraft due to “C-Check at the early part of 2018 and re-protection exercise” all contributed to the poor performance.

“Potential passengers are no longer waiting for airline offers to travel round the world, various groups and organization are putting up irresistible packages for passengers and bringing them to fly with registered airline. This in turn is splitting the revenue to be generated by the airlines in scheduled operations.”

Recall that in 2017, the EU banned several airlines including Medview from flying into its airspace which made it lost to the privilege of transporting its passengers directly to London during the period.

To continue to cater to its customers, the airline embarked on a re-protection exercise which basically enables airlines to transfer their passengers to other airlines at an often higher cost than the original ticket amount paid by the passengers.