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African airlines set to post $100m loss - Iata

Jun 05 2017 20:04
Carin Smith

Cancun – Although in general African airlines remain in the red, the state of their financial affairs has at least not deteriorated when compared to the performance in 2016, according to the International Air Transport Association (Iata).

African airlines are expected to post a $100m loss in 2017, according to an Iata estimate. The expected loss for African airlines is in line with the $0.1bn total loss they saw in 2016.

At the same time passenger demand in Africa’s aviation industry is expected to grow by 7.5%. This is slightly behind the expected capacity growth of 7.9%.

As for safety, African airlines reached what Iata deems to be a major milestone in 2016 by having no jet hull losses last year.

“A general improvement in commodity prices is helping to invigorate Africa’s economies – and offset fuel price increases,” said Iata at its annual AGM.

“This trend, however, is unlikely to accelerate substantially. The burdens of high taxes, higher-than-global-average fuel prices, competition from the Guld and limited intra-continental liberalisation remain.”

Iata expects the balance of all these factors to result in continued small losses.

For the global aviation industry, Iata revised its 2017 industry profitability outlook upwards. It now expects airlines will report a $31.4bn profit in 2017 – up from the previous forecast of $29.8bn on revenues of $743bn.

According to Alexandre de Juniac, CEO of the International Air Transport Association (Iata), 2017 will be “another solid year of performance” for the airline industry. Demand for both the cargo and passenger business is stronger than expected, the industry body said at its annual AGM.

“While revenues are increasing, earnings are being squeezed by rising fuel, labour and maintenance expenses. Airlines are still well in the black and delivering earnings above their cost of capital,” said De Juniac.

“But, compared to last year, there is a dip in profitability.”

Globally In 2017 airlines are expected to retain a net profit of $7.69 per passenger. That is down from $9.13 in 2016 and $10.08 in 2015. The average net profit margin stands at 4.2% - down from 4.9% in 2016.

At the same time, while overall airline industry performance is strong, there are major differences between regions. About half the industry profits are generated in North America, followed by carriers in Europe and Asia-Pacific.

*Fin24 is a guest of Iata at its AGM

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