African airlines incur record losses, risk bankruptcy, says IATA

Posted: February 6, 2021 in general
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African airlines, already very fragile even before the advent of the Coronavirus disease (Covid-19) pandemic, now risk bankruptcy, according to the International Air Transport Association (IATA).

In 2020, Africa’s airlines recorded a loss of 78 million passengers and 58 percent of their overall capacity compared to previous year, this is even as four carriers on the continent have suspended operations, while two others have gone into receivership.

IATA, on its part, indicated that 2019 traffic volumes in Africa would not return before 2023. The continent “should experience a late recovery of its financial performance,” the association said, deploring the timid support of governments in the region.

It would be recalled that the Nigerian government, through the Ministry of Aviation, in January, disbursed the first tranche of financial intervention to the aviation industry, with Air Peace, arik Air and others getting over a billion naira in grants to offset operational challenges incurred as a result of the pandemic.

On a global scale, passenger traffic has fallen by 60 percent, bringing air transport statistics back to the 2003 level. Concretely, only 1.8 billion people boarded the plane in 2020, compared to 4.5 billion in 2019. As a result, the airlines worldwide have lost $370 billion, airports $115 billion, and air service providers $13 billion.

“With the border closures and travel restrictions put in place worldwide in April, the total number of passengers fell by 92 percent compared to 2019; 98 percent for international traffic and 87 percent for domestic transport,” says ICAO report.

“After reaching the low point in April, passenger traffic rebounded moderately during the summer period. However, this upward trend was short-lived, stagnating and then worsening in September when the second wave of infection in many regions prompted the reintroduction of restrictive measures,” the UN agency said.

Many African airlines, already very fragile even before the advent of the pandemic, risk bankruptcy. This is the case of South African Airways, which is almost bankrupt. Kenya Airways is going through a difficult phase with heavy losses that have pushed the Kenyan authorities to start its nationalization.

Royal Air Maroc, with a loss of more than Euro 320 million, has put in place a restructuring plan with 858 job cuts announced, of which more than 600 have already left the company in the context of economic redundancies, voluntary departures and the sale of aircraft to reduce the fleet and reduce operating costs, and others.

Ethiopian Airways, the strongest airline on the African continent, has recorded huge revenue losses in 2020, despite its rapid adaptation to the crisis with its focus on cargo transport and the repatriation of Africans stranded in many countries during the outbreak of COVID-19 pandemic.

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