Bird’s eye view of returns in aviation sector

The Nigerian aviation sector is largely a closed sector to the retail investing public. But two publicly quoted aviation services companies provide glimpse of opportunities in the air transportation of the economy. In this report, Deputy Group Business Editor, Taofik Salako, looks beyond delayed flights, cancellations, baggage and breaches to how increased economic activities uplifting earnings and returns in the air travel sector.

Retail investors account for more than one-third of total transactions by domestic investors at the Nigerian stock market. Trading data at the Nigerian Exchange (NGX) showed that domestic retail investors were major drivers of the record performance at the stock market. Retail investors accounted for N3.65 trillion out of N9.27 trillion traded by domestic investors in 2025. Foreign portfolio investors had contributed N2.65 trillion to push the total transactions at the NGX in 2025 to all-time high of N11.92 trillion, 113.24 per cent above N5.59 trillion recorded in 2024.

This validates the inclusive wealth-creation potential of the capital market, with opportunities across the entire strata of large, high networth, institutional investors to individual and retail investors. Beyond the institutional and wholly structured investing vehicles like mutual funds, asset management firms and pension funds, the open-market system of the stock market allows direct participation by retail investors. Directly and indirectly, the capital market is a cyclical powerhouse of benefits from aggregating funds for national development through capital raisings by governments and companies to distributing and redistributing economic gains to the generality of the citizens.

The aviation sector is largely seen as an elite sector; with huge capital outlays, stringent regulations and intense global focus. Previous attempts to create inclusive window through direct public quotation of airlines ended unceremoniously, with the regulatory authorities forced to delist those companies due to poor performance and governance. But the performances of the two quoted aviation services companies- Nigerian Aviation Handling Company (NAHCO) Plc and Skyway Aviation Handling Company (SAHCO) Plc are again endearing the aviation sector to the investing public.

Facts on ground

The two ground handling companies, which arose from the privatisation programme of the government, have emerged as two of the most-sought-after companies at the stock market. With three-digit capital gains in 2025, NAHCO and SAHCO, sounding alike, not only engage in similar business but tend to mirror each other, providing overall view of a robust industry with strong earnings outlook.

The unaudited financial results of the companies for the year ended December 31, 2025 showed two companies with strong operational performances.

West Africa’s largest aviation services group, NAHCO remains ahead in headline figures and key indices, sustaining its ranking as the larger and more profitable aviation services group. NAHCO’s total revenue rose from N53.54 billion in 2024 to N65.21 billion in 2025. Gross profit increased from N33.08 billion to N38.61 billion. Despite the inflationary environment, increasing digitization and business know-how held down administrative expenses, almost unchanged at N13.89 billion in 2025 as against N13.82 billion in 2024. Operating profit thus rose from N19.84 billion in 2024 to N24.84 billion in 2025.

Profit before tax increased by 30 per cent to N24.256 billion in 2025 as against N18.702 billion in 2024. After taxes, net profit grew by 39.91 per cent from N12.865 billion to N17.999 billion. With this, earnings per share leapt by 40 per cent from N6.60 in 2024 to N9.24 in 2025.

The interim report for 2025 underscored the capability of the leading ground handling group to sustain its market-leading returns to shareholders. Despite 134 per cent increase in dividend per share for the 2024 business year, the group’s dividend cover improved to 1.56 times in 2025 as against 1.11 times in 2024, underlining the significant headroom for the group to continue its impressive dividend payment record. NAHCO had distributed N11.58 billion as cash dividends for the 2024 business year, representing a dividend per share of N5.94, compared with N4.95 billion paid for the 2023 business year. NAHCO remains the largest and most profitable entity in the aviation sector.           

NAHCO’s balance sheet also emerged stronger, reflecting internally driven expansion in equipment and reserves. Total assets increased from N46.95 billion to N53.88 billion. Shareholders’ funds grew by 32 per cent from N20.075 billion to N26.497 billion, showing high level of retained earnings.

SAHCO also recorded remarkable growths in turnover and profitability. Total revenue doubled from N24.94 billion in 2024 to N44.96 billion in 2025. Gross profit grew to N25.48 billion in 2025 as against N16.38 billion in 2024. Operating profit jumped from N6.53 billion to N14.62 billion. However, administrative expenses however rose from N10.05 billion in 2024 to N11.24 billion in 2025. Pre-tax profit rode on the back of a strong top-line to close 2025 at N14.28 billion compared with N6.49 billion in 2024. After taxes, net profit increased from N4.83 billion to N11.73 billion. With this, net earnings per share leapt from N3.57 in 2024 to N8.67 in 2025.

SAHCO’s balance sheet size expanded with total assets rising from N41.78 billion in 2024 to N56.58 billion in 2025. Shareholders’ funds increased from N29.27 billion to N39.87 billion.

Beyond the surface

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Underlying ratio analysis further corroborated the positive outlook for the two companies. Beyond its size, NAHCO showed stronger operational efficiency and asset utilisation. NAHCO’s operating profit margin improved from 37.05 per cent in 2024 to 38.08 per cent in 2025. Pre-tax profit margin rose from 34.9 per cent to 37.2 per cent. Return on total assets stood at 45.02 per cent in 2025 as against 34.93 per cent in 2024. Return on equity improved from 64.08 per cent to 67.93 per cent.

On the other hand, SAHCO achieved considerable improvements in underlying business performance. Operating profit margin improved from 21.81 per cent in 2024 to 32.88 per cent in 2025. Pre-tax profit margin rose from 21.68 per cent to 32.12 per cent. Return on total assets increased from 15.53 per cent to 25.24 per cent. Return on equity appreciated to 29.42 per cent in 2025 as against 16.5 per cent in 2024.

Governance and general impact

NAHCO and SAHCO are rekindling positive investors’ sentiment in the aviation sector with unsullied regulatory compliance and governance. Both companies comply with Nigeria’s code of corporate governance with well-diversified board. Both run a 12-man board with a non-executive chairman, non-executive directors and independent non-executive directors. Compliance records at the NGX showed timely filing of material and regulatory information. But one company still runs deeper than the other in terms of governance, compliance and general impact. SAHCO’s free float is on the edge of the minimum requirement of 20 per cent for companies quoted on the main board of the NGX. The majority core investor in SAHCO holds 78.62 per cent equity stake while directors hold additional 1.28 per cent, representing a total of 79.98 per cent. This leaves free float at 20.10 per cent, implying that out of SAHCO’s total issued shares of 1.35 billion ordinary shares, only 272 million shares are available for trading by the general investing public. SAHCO’s share price rose from N20.40 in 2024 to N88.45 in 2025.

On the other hand, NAHCO has 56.68 per cent free float, with 1.104 billion shares in the hand of the general investing public compared with 41.29 per cent total equity stake or 804.88 million shares hold by core investors and 2.03 per cent or 39.74 million shares hold by other directors. NAHCO’s share price doubled from N46.05 in 2024 to N108 per share in 2025.

Free float could have subtle influence on price discovery of a stock. Free float, otherwise known as public float, refers to the number of shares of a quoted company held by ordinary shareholders other than those directly or indirectly held by its parent, subsidiary or associate companies or any subsidiaries or associates of its parent company; its directors who are holding office as directors of the entity and their close family members and any single individual or institutional shareholder holding a statutorily significant stake, which is 5.0 per cent and above in Nigeria.

Stock markets maintain minimum public float to prevent undue concentration of securities in the hands of the core investors and related interests, a situation that can make the stock to be susceptible to price manipulation. Besides, it provides the general investing public with opportunity to reasonably partake in the wealth creation by private enterprises.

Positive outlook

Market analysts said the aviation sector has prospects for continuing growth in the light of ongoing macroeconomic reforms aimed at deepening non-oil exports and reinforcing Nigeria as the regional travel hub. 

Managing Director, HIghcap Securities Limited, Mr. David Adonri said both NAHCO and SAHCO have rooms for further growth considering the expansion going on in the aviation industry.

“The Aviation sector has bright prospect. NAHCO’s fundamentals have grown over the years and it has been consistent in dividends payment. SAHCO continues to post strong fundamentals and is also consistent in dividends payment,” Adonri said.

Managing Director, GTI Capital Limited, Mr. Kehinde Hassan, said the aviation sector has entered a recovery phase, although it is still susceptible to many downside risks.

 “The aviation services sector in Nigeria is in a recovery phase driven by rising passenger and cargo volumes, improved regulatory engagement and renewed access to leasing and financing after Cape Town Convention compliance.”

“However, the sector remains exposed to high Jet A1 costs, forex scarcity for maintenance, potential tax changes and infrastructure constraints. NAHCO and SAHCO both reported strong 2025 results, double‑digit revenue and profit growth, reflecting operational leverage as volumes recovered.

“These results are encouraging but sensitivity to fuel, foreign exchange (forex) and policy means gains could be volatile in the long run,” Hassan said.

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For the investing public, NAHCO and SAHCO are the two wings to fly into aviation destination, with subtle colourations that provide investors with enough choices.  A deeper look at the free float options could assist the investor make a quick and reasonable choice.