A prediction has come from the International Air Transport Association (IATA) that African carriers as a whole are probably to make small losses in 2018, estimated at around $100 million. In a statement issued by IATA’s Director-General, Alexandre de Juniac, in Geneva, the forecast was based on a collective net loss of $100 million by the airlines in 2017.
He further stated that a stronger forecast economic growth in the region was expected to aid demand growth of eight percent in 2018, slightly rising above the announced capacity expansion of 7.5 percent. The wider economic situation was only getting better slowly in Africa, which hinder the financial performance of its airlines.
As stated in the forecast, the key Nigerian economy is only just out of recession, and growth in South Africa remains extremely weak. As traffic is rising, load factors for African airlines are just over 70 percent, over 10 percentage points lower than the industry average.
Mr. Juniac said, “Stronger economic growth will help in 2018, but the continent’s governments need a concerted effort to further liberalize to promote the growth of intra-Africa connectivity. Strong demand, efficiency, and reduced interest payments would help airlines improve net profitability in 2018 in spite of rising costs.”
According to him, 2018 is expected to be the fourth consecutive year of sustainable profits with a return on invested capital exceeding the industry’s average cost of capital. He said these are good times for the global air transport industry as safety performance is solid. “We have a clear strategy that is delivering results on environmental performance while more people than ever are traveling by strongest level in demand for air cargo in over a decade”, he said.