African airlines to report $638mn loss

Africa's airlines are on track to post a combined loss of $638 million this year with demand still 32 percent lower than 2019 and capacity 31 percent off the 2019 high, according to Kamil Alawadhi, Regional Vice President for Africa and the Middle East, International Air Transport Association (IATA).

Alawadhi was addressing the 2022 General Assembly of the African Airlines Association (AFRAA) in Dakar, Senegal today.

"Nevertheless, in the face of macro-economic headwinds and the increased vulnerability of several African economies, the continent's airlines should reduce these losses by about two-thirds, falling to $213 million, next year. We see this being driven by a 27 percent rebound in passenger traffic and capacity increasing by 22 percent. By the time we gather for the 2023 AFRAA assembly, traffic should have recovered to 86 percent of pre-Covid levels."

Last year, airlines worldwide lost a combined $42 billion, Alawadhi said. "IATA's outlook sees the global loss reduced to $6.9 billion for 2022 and, any other shocks notwithstanding, a return to industry-wide profit in 2023 where we forecast a $4.7 billion profit on $779 billion worth of revenues. As you can see, the net profit margin is wafer-thin with average yields per ticket not even enough to cover a takeaway coffee. As we predicted, the recovery is moving at different speeds in the various markets around the world."

As with most markets, the cargo picture in Africa has reversed, Alawadhi added. "Our latest analysis points to a deepening year-on-year contraction which was down to -8.3 percent in October.

"The region's performance does not indicate tepid demand. Far from it. Airlines in the region are experiencing unprecedented load factors and many are operating at, or near to, maximum capacity. However, the current state of the industry in Africa is indicative of some key regional challenges including connectivity, market access and regulatory reform, taxes, charges and rising costs, environmental sustainability and safety.

"We are in recovery mode, but we could be tripped up. Proper planning, coordination and the provision of adequate staff and appropriate resources by airports and other service providers are crucial."