Few people are flying while the cost of operating an airline are rising steadily – this is what most African Airlines are experiencing and is predicted to push them into a massive multi million dollar loss.
According to a report by the International Air Transport Association (IATA), these Airlines in Africa will incur an estimated loss valued at a $0.1 billion in 2019.
This massive loss is attributed to low load factor and high cost of operations resulting from increased cost of fuel, says a recent report.
However, in East Africa, Tanzania, Uganda and Rwanda have of recent taken to acquiring new fleet for their national carriers but according to IATA these airlines in the region just like others on the continent are struggling with low numbers of passengers and a high cost of operation.
“Africa airlines will deliver a $0.1 billion loss (unchanged from 2018), continuing a weak trend into its fourth year. Each passenger carried is expected to cost the carriers $1.54, leading to a -1.0% net margin,” says IATA in the report.
According to this report however, a few airlines in the region will be able to achieve adequate load factors, which averaged the lowest globally at 60.7% in 2018.
A number of airlines around the world will make losses this year in what is attributed to high cost of operation resulting from increased cost of fuel, making it the worst year since 2014.
The agency has downgraded its 2019 outlook for the global air transport industry to a $28 billion profit (from $35.5 billion forecast in December 2018). That is also a decline on 2018 net post-tax profits which IATA estimates at $30 billion.
Global demand for airlines this year will grow by 5.0 percent down from 7.4 percent last year.
Of all the airlines in the world, it is only North American, Europe and Asia-Pacific carriers that will register high profits compared with other aviation firms in the world.
“North American carriers will deliver the strongest financial performance with a $15 billion post-tax profit (up from $14.5 billion in 2018),” says the report.