African airlines are expected to lose about $700 million in 2022, as their demand is expected to reach 72% of pre-COVID level.
This was disclosed by the International Air Transport Association (IATA) via its economic outlook.
According to the statement, which was shared with Nairametrics, lower vaccination rates in Africa have dampened the region’s air travel recovery to date.
What IATA is saying about airlines’ losses
It stated, “In Africa, lower vaccination rates have dampened the region’s air travel recovery to date. However, some catching up is likely this year, which will contribute to an improved financial performance. Net losses are forecast to be $0.7 billion in 2022. Demand (RPKs) is expected to reach 72.0% of pre-crisis (2019) levels, and capacity 75.2%.”
Highlights of the economic outlook
- North America is expected to continue to be the strongest performing region and the only region to return to profitability in 2022. Supported by the large US domestic market and the re-opening of international markets, including the North Atlantic, net profit is forecast to be $8.8 billion in 2022. Demand (RPKs) is expected to reach 95.0% of pre-crisis (2019) levels, and capacity 99.5%.
- Europe: In Europe, the Russia-Ukraine war will continue to disrupt travel patterns within Europe and between Europe and Asia-Pacific. However, the war is not expected to derail the travel recovery, with the region edging closer to profitability in 2022, with a net loss of $3.9 billion forecast. Demand (RPKs) is expected to reach 82.7% of pre-crisis (2019) levels, and capacity 90.0%.
- For Asia-Pacific airlines, strict and enduring travel restrictions (notably in China), along with an uneven vaccine rollout, have seen the region lag in the recovery to date. As the restrictions diminish, travel demand is expected to increase quickly. Net losses in 2022 are forecast to decline to $8.9 billion. Demand (RPKs) is expected to reach 73.7% of pre-crisis (2019) levels, and capacity 81.5%.
- Traffic volumes in Latin America recovered robustly in 2021, supported by domestic markets and relatively fewer travel restrictions in many countries. The financial outlook for some airlines, nevertheless, remains fragile and the region is expected to record a net loss of $3.2 billion this year. Demand (RPKs) is expected to reach 94.2% of pre-crisis (2019) levels, and capacity 93.2%.
- In the Middle East, this year’s re-opening of international routes and long-haul flights in particular will provide a welcome boost for many. Region-wide, net losses are expected to narrow to $1.9 billion in 2022, from a $4.7 billion loss last year. Demand (RPKs) is expected to reach 79.1% of pre-crisis (2019) levels, and capacity 80.5%.
In case you missed it
Nairametrics had reported that Nigeria is withholding an estimated $450 million in revenues belonging to foreign airlines according to data from IATA.
- The data is as of May 2022 and indicated Nigeria restricted funds rose 12.5% month on month. This amount represents the total amount of foreign airline revenues that cannot be repatriated by the airlines.
- In a report first published by Reuters, IATA claims airlines are owed about $1 billion globally in revenues held by countries suggesting that Nigeria alone accounts for 45% of the total share.
- Other African countries, Algeria, Ethiopia, and Zimbabwe also account for a combined $271 million also owed to foreign airlines.