African Airlines to Lose $800 Million in Q4 2022 | The African Exponent.

A recent report by African Airlines Association (AFRAA) revealed that African airlines are expected to lose about $800 million just from the last quarter of the year and a total of $3.5 billion for the year.

The report compared the data to 2019 pre-pandemic data. The local travel industry is still yet to fully recover from the effects of the pandemic, even though the infections number on the continent is comparatively low; with 12.6 million cases, Africa only accounts for 2% of the global COVID infections.

The November 2022 traffic of African airlines reached 85.7% of the 2019 level, while the deployed capacity of the airlines reached 84.2%. The domestic market share of African airlines on the continent is now 34.3% capacity, with the same percentage of passenger traffic.

For intra-continental flights, the passengers carried represented 30.9% with a corresponding capacity of 24.8%, while for intercontinental flights, the passenger traffic is 34.2% with a capacity of 34.8%. On a positive note, the operations of African airlines on international routes have surpassed that of 2019 by 2.28%, with 7 airlines exceeding the number of international routes they operated before the pandemic.

The report also made mention of the Ebola virus, although, the outbreak in Uganda has yet to invoke any travel advisories. The Ugandan government has imposed lockdowns on Ebola hotspots in the country and airlines are simply advised to exercise caution and report passengers whom they suspect to have the virus to relevant authorities.

The $3.5 billion total loss projection for the year is equivalent to 20% of the total 2019 revenue, and more than 50% of IATA’s projected loss of $6.9 billion for the global aviation industry.

IATA estimates that in 2023, the aviation industry will finally turn a profit of $4.9 billion for the first time since 2019, albeit a small figure compared to 2019’s $26.4 billion profit. The improvement in global profitability is expected to be mainly driven by an increase in passenger traffic and cargo yields as well as a slower growth in costs compared to revenues.

The current struggle for profitability is mostly due to the hike in fuel prices. The AFRAA report shared that the price of Jet A-1 fuel, one of the most commonly used fuels in commercial aviation, is still on the rise. As of November, its global average price per barrel was $141.5. This is a significant amount for many African countries, especially with the rising exchange rates. IATA’s projected impact on global airlines fuel bill for the complete year is $222 billion. Fuel alone represents one of the most significant operating costs for airlines.

In its December report, IATA also cited the economic pitfalls bedevilling the continent’s aviation sector: “Africa is particularly exposed to macro-economic headwinds which have increased the vulnerability of several economies and rendered connectivity more complex.”

AFRAA, established in 1968 and headquartered in Nairobi, Kenya, is a trade association of the member states of the African Union (AU). The association has 44 member airlines across the continent, who represent over 85% of total international traffic carried by African airlines.