New Telegraph

African airlines to post $638 million loss in 2022

Despite economic uncertainties, the International Air Transport Association (IATA) has said there are plenty of reasons to be optimistic about 2023, predicting that it expects a return to profitability for the global airline industry as airlines continue to cut losses to their business in 2022 stemming from the effects of the COVID-19 pandemic.

IATA disclosed that in 2023 the airline industry is expected to tip into profitability as carriers are anticipated to earn a global net profit of $4.7 billion on revenues of $779 billion (0.6% net margin). This expected improvement comes despite growing economic uncertainties as global Gross Domestic Product (GDP) growth slows to 1.3 per cent (from 2.9 per cent in 2022). In the same vein, African airlines are expected to post a loss of $638 million in 2022, narrowing to a loss of $213 million in 2023.

Passenger demand growth of 27.4 per cent is expected to outpace capacity growth of 21.9 per cent. According to IATA, the clearing house for over 290 global airlines, cumulatively, in 2023, airlines are expected to post a net profit of $4.7 billion – a 0.6 per cent net profit margin, adding that it is the first profit since 2019 when industry net profits were $26.4 billion (3.1per cent margin). In 2023, airline net losses are expected to be $6.9 billion (an improvement on the $9.7 billion loss for 2022 in IATA’s June outlook). This is significantly better than the losses of $42.0 billion and $137.7 billion that were realised in 2021 and 2020 respectively.

The Director-General of IATA, Willie Walsh, said resilience had been the hallmark for airlines in the COVID-19 crisis, addingthatastheylook to 2023, the financial recovery would take shape with a first industry profit since 2019. His words: “That is a great achievement considering the scale of the financial and economic damage caused by government-imposed pandemic restrictions. 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. “Many airlines are sufficiently profitable to attract the capital needed to drive the industry forward as it decarbonises. But 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.” The IATA boss maintained that the expected profits for 2023 are razor-thin but noted that it is incredibly significant that they have turned the corner to profitability. “The challenges that airlines will face in 2023, while complex, will fall into our areas of experience. The industry has built a great capability to adjust to fluctuations in the economy, major cost items like fuel prices, and passenger preferences.”

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