The International Air Transport Association (IATA) forecasts global industry net profit to rise to $38.4 billion in 2018, an improvement from the $34.5 billion expected net profit in 2017 (revised from a $31.4 billion forecast in June).
IATA stated this in a statement which contained a review of the industry performance in 2017 and the expectations for 2018. IATA however said African carriers are expected to continue to make small losses of $100 million in 2018 following a collective net loss of $100 million in 2017.
“Stronger forecast economic growth in the region is expected to support demand growth of 8.0 per cent in 2018, slightly outpacing the announced capacity expansion of 7.5 per cent,” IATA said.
The wider economic situation is only improving slowly in Africa, which is hampering the financial performance of its airlines. The key Nigerian economy is only just out of recession and growth in South Africa remains extremely weak.
While traffic is growing, passenger load factors for African airlines are just over 70 per cent which is over 10 percentage points lower than the industry average. With high fixed costs this low utilization makes it very difficult to make a profit. Stronger economic growth will help in 2018, but the continent’s governments need a concerted effort to further liberalize to promote growth of intra-Africa connectivity.
IATA forecasts losses for African airlines in 2018
