Fagbemi: Why We Are Restructuring NAHCO

0
Olatokunbo-Fagbemi

The Group Managing Director of the Nigerian Aviation Handing Company, Mrs. Olatokunbo Fagbemi, in this interview says the move to restructure the organisation is to enhance its operations and boost revenue. Chinedu Eze brings the excerpts:

 

 

Restructuring NAHCO

Sometime in the middle of last year, we had some changes in the ownership structure of NAHCO. As a result of that change, the board of directors changed also. I joined the board as a non-executive member sometime in August. One of the things I tried to do with the former Managing Director was to look at the business review of the business itself because at every point in time, it is important for business like ours to go forward.  We cannot plan to move forward if we do not know where we are. So we had to invest and we are still investing with KPMG on a business review and as part of that review, the Board and the management went to Kigali to do a strategic think of where we are and one of the things that came out of that strategic session which held in Kigali in November 2018 was that we have a new vision and mission and a new core statement and value and we decided that we will run as a group structure. If you look at the audited financial statement of our company, you will realise that we have three subsidiaries. We have NAHCO Energy and Power Infrastructure Company, NAHCO Free Trade Zone and the Mainland Cargo. All these companies were being run separately and what we hope to do is to put them together so we can get the full benefits of the business and based on that the former Managing Director resigned and I became the Group Managing Director in December 2018. Our new vision is not too far from the old vision we had and that is to be the leading service provider and reshaping our chosen market. Our mission is to consistently provide exceptional services using professional teams, cutting edge technologies and leading practices to deliver value to all stakeholders and our differentiating competent is service excellence. We have added empathy to our core value. Our core values are safety, integrity, reliability, respect and empathy. Empathy for us is very important because we want to operate in the place of excellence so that we are not just saying we are delivering customer service but we are delivering customer service from the perspective of ‘how do you feel?’ and hopefully we believe that whether it is for the internal or external customer that come, it will be a great place for people to work. We want our turnover to grow by over five times and we want to grow across the Africa continent. We have a five-year strategic plan.

We are advising people to buy our shares now because in five years’ time, this company by the grace of God will be different. I am not saying the journey will be smooth, but we will achieve it. Like I told every one of our staff, it is not our intention to lay off staff but it is our intention to get things right. We will do everything to improve our people. We are going to invest heavily in our people and in automation. Automation does not mean that people will be laid off. Despite automation, people will still be employed. I know usually when we have changes like this, the first thing is that people are afraid, but things will be different and we will bring more professionalism. NAHCO today is the leader in this industry and we want to maintain that leadership but we don’t want to be the leader without using excellence service. We want to be the leader, driving the business with new innovations, with the right systems and right processes and using service excellence. In a nutshell, this is my story and it is very simple.

 

 

Investment in equipment and manpower development

 

We are still fine-tuning the plan, which is why we are doing this with KPMG and we are going to set up a programme management office to drive it. We are looking at growth in the region of five to seven times which is achievable given the plans that we have. In terms of investment in equipment, in the last couple of months, we have invested about N1.9billion naira in equipment. You will begin to see the equipment by the end of the first quarter. By the end of the year, we will have spent about N3.6 billion in equipment. By September, we will have the next set of equipment coming in. That is what we are doing in terms of equipment. We are going to have a master plan for our facilities. I can’t give you the figure for this because it is based on what comes out of the master plan, but what we are doing immediately is to ensure that we refurbish what we have in terms of our facilities. We will make them look better and these include our buildings, the warehouses amongst others and improve on all the processes within the system. We are also drawing up a people’s plan for our people. These things are strategic for us.

 

Wooing customers

 

I am sure in business you lose customers, so I won’t say it is due to internal challenges because I have not done enough study to be able to tell you what the reasons are. What I will tell you is that we will do everything to retain the customers that we have. We will do everything to attract customers. We want to set new standards, bring professionalism into this service business. We know that as we improve on professionalism, the deserving customers will come to us.

Pricing

In terms of price war, I can’t tell how much the other side is charging because they are based on agreements. The issue is that right now; we are ground handing business. We are in a business where our customers are stronger than us. Most of them are the airlines and that is the challenge in this ground handling business. Most of these strong customers are in the cost-cutting mode. So, essentially, there is no secret that this brings a lot of pressure on pricing. But one thing that I have begun to discuss is that we should ensure that pressure on price does not drive any company in terms of safety and security in the provision of services. I will champion everything to ensure that the pressure on price does not compromise safety and security.

 

Rivalry and Lufthansa’s withdrawal of its shares from NAHCO

We need to go back to the history of the two companies, Skyway Aviation Handling Company Limited (SAHCOL) and NAHCO and I have a fair idea of both. NAHCO was set up by the foreign airlines because there was a service gap at that time. Nigeria Airways had the Sky Power aviation handling company and they were handling Nigeria Airways and Nigeria Airways was the leader in the industry. On the other hand, there was a department in the Federal Airports Authority of Nigeria (FAAN) that did some handing and so the foreign airlines were not getting as much value, so British Airways, KLM, Lufthansa all invested in the company. They had 40 percent shares, 60 percent was for FAAN. This is how NAHCO started and most of the people that came in from the foreign side were going into NAHCO. SAHCOL was set up strictly for Nigeria Airways and was focused for Nigeria Airways and was hardly doing business outside Nigeria Airways and maybe for the African Carriers.

As a business entity, I believe that SAHCOL took advantage of that impact that happened in the business and that fact that it was now on its own to become fully commercial. So, SAHOL growth had started gradually from the 1990s and in fact the business environment is growing and more airlines are coming in. So, the market was getting bigger. NAHCOL and SAHCOL were getting bigger. There is no doubt that customers have left from NAHCOL to SAHCOL but also we have had customers leave from SAHCOL to NAHCO.

This is the basis of a competitive environment. What you described as animosity between the two companies is actually issues of competition. There are areas of competitions and there are also areas we need to cooperate. We rent from them and they rent from us. We have areas in which we corporate.

In terms of determining price, we have to worry about the issues of trust. However, there has to be a part where we need to get the regulators to look at, such that we do not compete in such a manner that affect safety and security because that is most important thing when it comes to air transport. We need the regulators to help in ensuring that there is a rule that is clear, so I thing that if that is worked out, it will be better.

On the issue of Lufthansa, there is no problem with Lufthansa.  Lufthansa is still one of our best clients. If you cast your mind back, a few years ago, most of the airlines began to divest from investment in handing companies; so it had nothing to do with Nigeria or NAHCO. It had to do with decisions taken from the headquarters for each of the airlines to say which business do we invest in and which business don’t we invest in. So, each one of the airlines left NAHCO based on the decisions that were made at corporate levels to exit ground handling; not just in Nigeria but all over. So leaving NAHCO was corporate decision taken in 2016 that finally came to this in 2018.

 

Managing the unions

This is a unionised environment, so the best we will do is to manage the unions. As far as I am concerned, I think if the truth is told, decisions are better taken. So, for me what I have done is that everything is on the table, if you know how much we have made, then it is from what we make that we can use. Like I have told them, we have issues with our people and equipment, all these things require equipment. So, we have to put this into consideration. The negotiation for the condition of service started last year September and it went on for a while. I don’t know the issues that happened with the last Managing Director but I can confirm to you that all the basic issues in the condition of service, we have agreed on them and there is nothing that is outstanding with respect to the condition of service. We know that people always use different situations to address different other issues because when you are annoyed about something, if something happens you may react in another way. I think, as at now, there are no more issues between Union and management. We are on the same path. We have resolved the other issues and people have expressed themselves in various ways in terms of when the negotiations were going on, maybe to push the hand of management to be able to reach an agreed point but that point has been reached, so I don’t see any other thing that is going on. So, I have the confidence and the word of the unions that they are working together to make this organisation.