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LAGOS – Business organisations, especially those operating within the aviation ecosystem have been advised to embrace diversification in order to remain relevant and profitable.
This is just as new entrants into the airline sub-sector have been told to adopt leasing option, rather than outright acquisition of airplanes.
Mrs. Mary Olowo-Sokeye, Chief Financial Officer (CFO), InterGuide Group, gave these advices recently in Lagos on the sideline of the 29th Annual Conference of the League of Airport and Aviation Correspondents (LAAC) with the theme: ‘Financing Aviation In Nigeria: Risks, opportunities and Prospects.’
Olowo-Soyeke said that diversification of businesses would lead to the growth of the business and increased profit.
According to her, reinvesting profits outside the core area of influence, would lead to increased finances.
Besides, she advised investors to imbibe the culture of financial oversight to be able to monitor the inflows and outflows of the business.
She added: “Most times, people focus on profit and loss, but there’s so much more. Cash flow and liquidity is big. If you have a reinvestment you want to do and your cash flow is negative, I can almost tell you that no chief executive or investor would be willing to approve that.
“So, ensuring that you’re really taking care of your financial health or the financial health of a company is essential for success.”
Besides, Olowo-Sokeye expressed that outright acquisition of airplanes by new entrants into the business was one of the factors militating their growth or sustainability.
According to her, the leasing option would enable the airline to operate the aircraft for a few years before returning it to the lessors while funds could also be re-invested to sustain the business.
She also urged the players in the sector to learn from the mistakes and successes of older airlines, either existing or defunct.
She added: “You adopt what they’ve done well, and you try to plan for what they didn’t do so well. So, a lot of times I would encourage that new airlines start with the leasing option.
“I think a lot of times people want to own those aircraft and that could be problematic. It works for some people if you have a lot of cash, but because when you are in the loans, you have very high payment terms because you’re owning it for the lifetime.
“It’s like a car; you buy a car today, if it’s N50 million, you’ve got to pay that N50 million over five years. Leasing is slightly different. You never want to own it. You just use it to get you to make money.”
She also advocated infusion of funds into the aviation business by the government, stressing that this would lead to the empowerment of existing airlines in innovation and infrastructure development.
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