Airlines Business & Finance News

Coronavirus hammers African airlines

As cases of infection and deaths from the coronavirus continue to rise around the world, the aviation industry has taken a nosedive with countries restricting travel.

Africa’s Airline Association (AFRAA) last week warned that “significant” losses loom for the continent’s struggling airlines.

AFRAA’s secretary-general Abdérahmane Berthé said while African airlines were already doing badly, the losses anticipated from the pandemic will hurt the industry even further. Even before the pandemic, the aviation industry globally was recording profits while Africa is still considered the weakest region with losses registered annually since 2010.

“The financial situation for African airlines was not good to begin with. According to figures from 2018, African airlines were losing on average $1.09 per passenger. It is really a crisis for airlines now,” said Mr Berthé.

Africa represents slightly more than three per cent of air transport compared with the global total. He said a number of African national carriers have recently required government bailouts and the current situation could make matters worse.

A struggling South African Airways is in the process of obtaining $140 million as part of a bailout package for bankruptcy protection; the Kenya government has also said that it is making plans to bail out Kenya Airways to ensure it does not collapse. Morocco’s Royal Air-Maroc, Air Namibia, Air Zimbabwe, Tanzania’s Precision Air and EgyptAir have at one time or another received government bailouts.

Last month, Kenya Airways said it had lost $8 million in revenue in about one month since it suspended flights to China as a precaution against the deadly coronavirus outbreak.

“Most African airlines have stopped flights to China and only Ethiopian Airlines continues to operate in China, but has also reduced on the number of flights to China,” said Mr Berthé adding, “Yet most of Africa’s increased business came from that side of the world. African airlines are earning five per cent of the airline revenues from China and seven per cent from the Asia Pacific market, which means the outbreak has made a bad situation worse.”

But compounding the problems facing African airlines, is the shrinking of their intercontinental market share, pointing to their marginalisation in the international scene, from 40 per cent in the 1990s, to 20 per cent currently. The top five African airlines account for more than 50 per cent of the industry share.