[Image File/IATA]

African Airlines expected to Post $638 Million Loss in 2022

ADDIS ABABA – The International Air Transport Association (IATA) on Tuesday projected for the African carriers to post a loss of $638 million in 2022.

Their financial performance is expected to improve in 2023, with the annual loss dropping to $213 million, according to IATA’s Economic Outlook and State of the Industry.

As per the IATA report, passenger demand growth of 27.4% is expected to outpace capacity growth of 21.9%. Over the year, the region is expected to serve 86.3% of pre-crisis demand levels with 83.9% of pre-crisis capacity.

“Africa is particularly exposed to macro-economic headwinds which have increased the vulnerability of several economies and rendered connectivity more complex,” the trade association of the world’s airlines noted.

African carriers, as well as Latin America and Asia/Pacific, “will remain in the red and We will have to look to the following years for their potential return to profitability,” the trade Association announced.

In other regions, North America is the only region to return to profitability in 2022, based on IATA’s estimates. Europe and the Middle East will join the ranks in 2023.

‘Much Ground to Cover”

Globally, the airlines’ net losses are projected to be $6.9 billion at the end of 2022. This is significantly better than the losses of $42.0 billion and $137.7 billion that were realized in 2021 and 2020, respectively, according to IATA.

In 2023, IATA expects a return to profitability for the global airline industry as airlines continue to cut losses stemming from the effects of the COVID-19 pandemic on their business in 2022.

The airlines are projected to post a small net profit of $4.7 billion – a 0.6% net profit margin. It will be the first profit since 2019 when industry net profits were $26.4 billion.

“That is a great achievement considering the scale of the financial and economic damage caused by government-imposed pandemic restrictions,” said Willie Walsh, IATA’s Director General.

“But a $4.7 billion profit on industry revenues of $779 billion also illustrates that there is much more ground to cover to put the global industry on a solid financial footing.

Walsh said many airlines are sufficiently profitable to attract the capital needed to drive the industry forward as it decarbonizes while many others are struggling for a variety of reasons.

“These include onerous regulation, high costs, inconsistent government policies, inefficient infrastructure, and a value chain where the rewards of connecting the world are not equitably distributed,” said IATA’s Director General.

Featured Image: IATA says the COVID-19 pandemic has had an enormous and unprecedented impact on the industry with a decrease of 65.8% in annual Revenue Passenger Kilometers (RPKs) between 2019 and 2020. [Photo © IATA]