African airlines to post a loss of 638 million USD in 2022

The International Air Transport Association (IATA) projected that African airlines will post a net loss of 638 million USD in 2022.
This was disclosed at the annual IATA Global Media Day held in Geneva,
Switzerland this week. According to the association, passenger demand growth of 27.4 percent is expected to outpace capacity growth of 21.9 percent. Over the year, the region is
expected to serve 86.3 percent of pre-crisis demand levels with 83.9 percent of
pre-crisis capacity.

“Africa is particularly exposed to macro-economic headwinds which have
increased the vulnerability of several economies and rendered connectivity more
complex,” IATA said.

The loss expected to drop to 213 million USD in 2023. IATA expects a return to profitability for the global airline industry in 2023 as airlines continue to cut losses stemming from the effects of the COVID-19 pandemic to their business in 2022.

In 2023 the airline industry is expected to tip into profitability. IATA expects the global airline industry to post a small net profit of 4.7 billion USD in 2023. It is the first profit since 2019 when industry net profits were 26.4 billion USD.

In 2022, the global airline industry net losses are expected to be 6.9 billion USD. IATA believes that this is significantly better than losses of 42.0 billion and 137.7 billion that were realized in 2021 and 2020 respectively.

Willie Walsh, IATA’s Director General, said that resilience has been the hallmark for airlines in the COVID-19 crisis. “As we look to 2023, the financial recovery will take shape with a first industry profit since 2019. That is a great achievement considering the scale of the financial and economic damage caused by government imposed pandemic restrictions,” Walsh said.

However, he said 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 decarbonizes. 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,” Willie Walsh said.

Airlines were able to cut their losses in 2022, in the face of rising costs, labor shortages, strikes, operational disruptions in many key hubs. Fuel accounts to 35-40 percent of airlines total expenses. Jet fuel prices are expected to average 138.8 per barrel for the year. IATA has revealed that the economic and geopolitical environment presents several potential risks to the 2023 outlook.