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COVID-19: FAAN loses N17.5bn in 5 months

87% of 2020 overhead cost wiped out
Senate orders $18bn NLNG dividend payment probe

The Federal Airports Authority of Nigeria (FAAN) is reeling under the excruciating pain of COVID-19 as the agency said it has suffered over N17.5 billion (90%) revenue loss in the last six months. At a virtual meeting with critical industry stakeholders, the Managing Director of FAAN, Captain HamisuYadudu, admitted the losses, but added that it would continue to suffer this reduction in revenue for the next few years up to when the global travel returns to the pre-COVID-19 level. “To make matters worse, the Airport Council Internal (ACI) had forecasts that recovery to pre-COVID-19 (2019 level) could take up to the end of 2023 or 2024,” he said. Corroborating the FAAN

MD on loss of revenue, the Director of Finance and Accounts, Mrs. Adenike Aboderin, in her presentation titled, “Airport Economics in the Ongoing COVID- 19 Crisis, Implications on FAAN”, said FAAN had lost over N17.5 billion of aeronautical charges in 23 weeks compared to 2019.

“Eighty-seven per cent of 2020 budgeted overhead cost was completely wiped out in six months,” she said. Aboderin noted that up to 95% decline in weekly revenues and from week 14 till date revenue loss had averaged 92%. Explaining further, Aboderin said in non-aeronautical revenue, FAAN lost N1.4 billion from April to June 2020. “Customers are increasingly defaulting on payment, (there is) increase in request for payment suspension, deferrals and waivers due to the crisis,” she noted. According to her, only 8.7% of non-aeronautical revenue charges was collected from April to June compared to the same period in 2019.

From her statistics, revenue contribution by charges 72% was passengerrelated and 28% was from airline, aircraft related operations. Aboderin stressed that FAAN had considered the International Civil Aviation Organization (ICAO)’s recommendations of cost relatedness which recommended that as a general principle, users shall ultimately bear their full and fair share of the cost of providing the airport. Meanwhile, Yadudu emphasized that in spite of the drastic drop in revenue, as at date, FAAN had managed to ensure that all her local airports have commenced domestic operations, having met the requirements by Presidential Task Force (PTF) on COVID-19, NCAA and other regulatory bodies. According to him, this had been at a huge cost on the authority on maintenance and utilities despite the total decline in traffic as well as revenue.

“The above automatically translates to fewer passengers and limited income even with the resumption of international operations. “All these are issues of great concern to the authority and partly what has necessitated the need for all our stakeholders to rub minds on strategies to adopt to ensure that the industry remains in operation to provide the very much needed service,” he said.

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