The International Air Transport Association says African carriers including those in Nigeria are expected to report a $300 million net loss in 2019 despite an expected global airline industry net profit of $35.5 billion.
The IATA said the $300 million net loss would, however, be a slight improvement from the $400 million recorded in 2018.
It added that the loss would make Africa the weakest region, as it had been over the past four years.
According to the IATA, lower oil prices and solid, albeit slower, economic growth are extending the run of profits for the global airline industry, after profitability was squeezed by rising costs in 2018.
It added that the forecasted figures were slightly ahead of the $32.3 billion expected net profit in 2018, which was revised down from $33.8 billion forecast in June.
The association said, “We are cautiously optimistic that the run of solid value creation for investors will continue for at least another year. But there are downside risks as the economic and political environments remain volatile
“2019 is expected to be the 10th year of profit and the fifth consecutive year where airlines, on the whole, deliver a return on capital that exceeds the industry’s cost of capital, creating value for its investors.”
IATA’s Director-General and Chief Executive Officer, Alexandre de Juniac, said the association had expected that rising costs would weaken profitability in 2019, but the sharp fall in oil prices and solid Gross Domestic Product growth projections had provided a buffer.
“So we are cautiously optimistic that the run of solid value creation for investors will continue for at least another year. But there are downside risks as the economic and political environments remain volatile,” he said.
According to the IATA, highlights of the forecast for 2019 include the return on invested capital coming in unchanged at 8.6 per cent, and overall revenues for the sector up by 7.7 per cent to $885 billion.
It stated that additionally, passenger numbers and cargo tonnes were expected to rise, reaching 4.59 billion and 65.9 million, respectively.
“All regions, except Africa, are expected to report profits in 2018 and 2019. Carriers in North America continue to lead on financial performance, accounting for nearly half of the industry’s total profits. Financial performance is expected to improve compared to 2018 in all regions except for Europe, where improvement has been delayed by the high degree of fuel hedging,” the IATA said.