African airlines to lose $300m in 2019 – IATA

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The International Air Transport Association (IATA) says African carriers are expected to report a $300 million net loss in 2019.

The Geneva-based apex aviation body said this was a slight improvement from the $400 million net loss recorded by airlines in the region in 2018.

IATA made the projection in a statement issued by its Director General, Mr Alexandre de Juniac, which was obtained on Wednesday in Lagos.

“The expected net loss per passenger is $3.51 (-2.1 per cent net margin). This makes Africa the weakest region, as it has been over the past four years.

“Performance is improving, but only slowly. Losses are expected to be cut in 2019 as fuel prices decrease. The region benefits from higher-than-average yields and lower operating costs in some categories.

“However, few airlines in the region are able to achieve adequate load factors to generate profits,” de Juniac said.

According to him, IATA forecasts the global airline industry net profit to be $35.5 billion in 2019, slightly ahead of the $32.3 billion expected net profit in 2018.

The IATA boss said all regions, except Africa, are expected to report profits in 2018 and 2019.

He said: “North American carriers are expected to deliver the strongest financial performance in 2019 with a $16.6 billion net profit (up from $14.7 billion in 2018).

“European carriers are expected to report a $7.4 billion net profit in 2019 (down slightly from $7.5 billion in 2018) while Asia-Pacific carriers are expected to report a $10.4 billion net profit in 2019 (up from $9.6 billion in 2018).

“Middle Eastern carriers are expected to report an $800 million net profit in 2019 (up from a weaker $600 million in 2018) and Latin American carriers are expected to report a $700 million net profit in 2019 (up from $400 million in 2018).”

de Juniac said the overall industry revenues were expected to reach $885 billion which was a 7.7 per cent increment on the $821 billion recorded in 2018.

He added that passenger numbers was expected to reach 4.59 billion, up from 4.34 billion in 2018.

“Lower oil prices and solid, albeit slower, economic growth (+3.1 per cent ) are extending the run of profits for the global airline industry, after profitability was squeezed by rising costs in 2018.

“It is expected that 2019 will be the tenth year of profit and the fifth consecutive year where airlines deliver a return on capital that exceeds the industry’s cost of capital, creating value for its investors.

“We had expected that rising costs would weaken profitability in 2019.
But the sharp fall in oil prices and solid GDP growth projections have provided a buffer.

“So we are cautiously optimistic that the run of solid value creation for investors will continue for at least another year.

“But there are downside risks as the economic and political environments remain volatile,” the IATA boss said. (NAN)

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