Louis Ibah

The International Air Transport Association (IATA) on Sunday, announced a downgrade of its 2019 forecast for investors in the global air transport industry to about $28 billion profit, from the initial $35.5 billion figure projected in December 2018 at its World Media Day event in Geneva, Switzerland. 

IATA linked the shrinking of profits for the global industry (by about $7.5billion) to “a deterioration in the business environment for airlines with rising fuel prices and a substantial weakening of world trade”.

IATA said African airlines will be worst hit from the projected profit loss as investors in the business would lose about $500million by the end of 2019.

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“African airline’s will deliver a $0.1 billion loss in 2019 (unchanged from 2018), continuing a weak trend into its fourth year,” said said Alexandre de Juniac, IATA’s Director General and CEO.

“Each passenger carried is expected to cost African carriers $1.54, leading to a -1.0 per cent net margin. Breakeven load factors are relatively low, as yields are a little higher than average and costs are lower. However, few airlines in the region are able to achieve adequate load factors, which averaged the lowest globally at 60.7 per cent in 2018,” said de Juniac in a speech delivered at IATA’s AGM on Sunday in Seoul, South Korea.

The IATA boss however said  the future of African airlines wasn’t that bleak as he hinted of a noticeable “improving performance” by most African airlines, although “improving, but only slowly.”

For the global airline industry, de Juniac said in 2019 overall costs are expected to grow by 7.4 per cent, outpacing a 6.5 per cent rise in revenues. As a result, net margins are expected to be squeezed to 3.2 per cent (from 3.7 per cent in 2018). Profit per passenger will similarly decline to $6.12 (from $6.85 in 2018). Under the current circumstances, the greatest achievement of the industry— which is creating value for investors with normal levels of profitability is at risk, said de Juniac.