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Alba Iulia
Monday, September 27, 2021

African airlines to make US$100 million loss in 2018-IATA

Headlines African airlines to make US$100 million loss in 2018-IATA

Zambia Airways Boeing 737-200
FILE: Zambia Airways Boeing 737-200

The International Air Transport Association (IATA) has projected that Africa’s airlines are expected to continue making a combined loss of $100 million in 2018, the same as 2017.

But the Zambian government says it is determined to have Zambia Airways return to the skies by October 25th 2018.

According to IATA’s 2018 global airline Economic Outlook report which was presented by IATA’s Director-General and CEO, Alexandre de Juniac, in Geneva, Switzerland recently, the slow pace of wider economic improvement in Africa is hampering the financial performance of the continent’s airlines.

This is in spite of an anticipated 8% growth in demand and capacity expansion of 7.5%.

The report added, “While traffic is growing, passenger load factors for African airlines are just over 70% 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 says the combination of low utilisation and high fixed costs make it difficult for airlines to make a profit.

Stronger economic growth will help in 2018, but Africa’s governments need to make a concerted effort to free up intra-African access to their markets as the increased connectivity will stimulate wider economic growth.

The biggest challenge to profitability in 2018 is rising costs, IATA cautions.

Oil prices are expected to average $60/barrel for Brent Crude in 2018 (up 10.7% from $54.2/barrel in 2017).

Labour costs have been accelerating strongly and are now a larger expense item than fuel (30.9% in 2018).

All regions are expected to report improved profitability in 2018 and all regions are expected to see demand growth outpace capacity expansion.

MINISTER of Transport and Communication Brian Mushimba
MINISTER of Transport and Communication Brian Mushimba

This week, Transport Minister Brian Mushimba told Journalists in Lusaka that the process of relaunching Zambia Airways has reached an advanced stage.

Mr Mushimba revealed that government is confident that Zambia Airways will return to the skies on October 24th, on the occasion of Zambia’s 54 Independence anniversary.

In September, Ethiopian Airways revealed that it was set to enter into a deal with the Zambia Government over the Zambia Airways project.

Ethiopian Airways CEO Tewolde Gebremariam said the tentative joint-venture carrier would feature the Zambian government and private-equity investors as additional shareholders.

The signing of an outline plan in the coming weeks would then set to stage for a final agreement which could be concluded by November.

The Zambian domestic market is currently home to Proflight Air Services, Royal Air Charters and the recently relaunched Mahogany Air.

Zambia Airways folded in 1994.

27 COMMENTS

  1. Investigate this and UPND

    I am not accusing them but they have NEVER been as noble as President Lungu IS as clean.

    Africa is full of corruptions and UNLESS you restrain from changing Governments – starting with leaving PF at the helm these loses will continue

    You have been warned

    Thanks

    BB2014,2016

    • Think twice before you leap. Investing in an airline in Africa is a tricky venture. Only the fittest can survive the competition.

    • All Airlines make losses, so shut up and let Africans take care of themselves.

      And now Zambian media is accepting awards from Chinese SMH. Why are Africans so easily bought by shiny things? Uluse.

    • It makes good business sense to go into a business where others are making losses, but you have to have a very genius plan. From what I know of many in the PF government, I can count the geniuses on my little finger.

    • The most profitable route on the entire continent is run by South African Airways between Lusaka and Johannesburg.

      That’s why SAA now flies 5 times a day and it averages $650 on a same day purchase. Go figure!!!

      Other routes for them are barely making it even within South Africa yet every current airline flying into Lusaka be it Emirates, Ethiopian, Namibian, Kenya Airways, etc. is making hay over the Zambian skies while the sun shines.

  2. And Heavily Indebted Poor Country Zambia wants to join this club. Airlines are capital intensive loss making ventures that serve only empty egos!

  3. It is now December 15 and the agreement could be concluded by end of november. Obviously it hasnt happened
    Imagine, african airlines are making losses and we are building new airports and reestablishing a national airline in this climate.
    Will the chineses take ndola airport when we cannot pay for it. They acquired assets they funded and built in sri lanka including their new airport.

    • Look man the report also speaks to the fact that there is low inter-connectivity between African states.. this simply means not enough Africans flying between African countries etc etc.. common sense would dictate that building airport infrastructure bridges the inter connectivity gap and gets African airlines flying more using improved airport infrastructure, thus, it’s good that we are getting new airports, it’s also good that it seems like Zambia is entering a joint venture with the already established Ethiopian Airlines.

      Thank you for reading.

  4. Failure voices are louder than success voices , really you dont base your business on what your competitors tell you .
    In zambia we are very good to champion how it will not work and we fail to achieve anything , I just read how zimbabwe has just bought fifteen aeroplanes for its air transport from Malaysia.
    Zambians must work up from the fear of the un known the best you can do is do training and employ exparts to help with running air transport dont forget to look at the dynamics of the air transport watching from afar is a disease most zambians who remain failures .
    When you fail it doesnt mean you cannot succeed in fact those have made it they failed several times failings are just lessons to learn from

    • Airline industry is a dog eat dog sector you will never see a billionaire creating one today only thing you see is mergers and partnerships of big players…only fooools like you who think airline business is simply parking an aircraft like at Kaluma tower and let it fill to the rafters then happily take off.
      Wake up from your docility!!

  5. Give me a single national African airline that is operating profitably besides Ethiopian? South African Airlines is crumbling, Kenyan struggling, talk about Angola and Nigeria – which other am I leaving out? Egypt Air? Libya? Morocco? Well, educate me. I must be very ignorant.

  6. Running an airline is not an easy undertaking . Edgar cant manage it. not even mushota with her fake PHD from matero unza.
    hahahahahahahahahahaaaaaaaaa……. let us rejoice and laugh out at our failures…
    probably we need chinese to run airline or arabs……………….. the oil sheik is ready to invest if zambia becomes a tax haven

  7. To crown it all…you intend to use accident prone Russian made planes. I would rather die than jump onto one of those Russian made flying coffins.

  8. Sponsored article by the UPND who always think the Western world will develop Africa…Ethiopian Airlines is doing fine and Zambia can learn from them…To say that just because South Africa and other Airlines are making loses and fold arms and waiting to be spoon fed is really being a danderhead…

  9. I bet you SAL is one with the biggest share of losses on that list.
    Meanwhile we have one dull minister called Brian always singing about creating a National Airline when they can not make a profit in Telecomms.

  10. This Brian minister must really be checked or fired all together! I thought being an educated and well traveled fellow he could bring some of his vast experience in government but all he has done is bring his ego which keeps letting him down terribly.
    With all these figures in his face, his still arrogant enough to push through his National airline agenda? Remember the back fired night time travel ban, from this guy, the useless idea of registering handsets, from this guy. Instead of advising his boss the realities on the ground his making sure he buries them in his wrong ideas!

  11. Really? Is the establishment of a national airline a priority in this climate? If airlines are struggling for passengers, where is Zambia airways going to get the extra passengers? What magic will a government such as we have, conjure to run an airline efficiently, attract paying passengers and make profit? Might we not invest in a proper job creating and sustainable manufacturing industry? But in short, could you even trust this lot with an airline?

  12. Maybe it is easier to pour money into loss making ventures and no questions will be asked where the money goes.
    Euro bind into raiways, zamtel zesco all getting funding but what is there to show for it.

  13. Basically The AU must start heavily taxing European, American and Asians airlines operating in African aerospace, while not doing the same to African airlines.

    Basically, use guerilla tactics to unseat the foreign airlines and force them to reduce coverage in Africa, then simply improve management of African airlines.

    This is what happens to African business trying to enter European, American and Asians markets, we find much protectionism there, we must do it too.

  14. African governments are the key to the revival of African aero industry.

    Problem too much Ba Koswe in purchase governments killing every progress.

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