In its Global Outlook report on Wednesday, IATA said the African airlines will see profitability this year but at different rates.
“This region has a high operational cost base and a low propensity to spend on air travel,” the outlook said, noting that the aviation industry in Africa continues to face several problems including infrastructure and connectivity challenges which dampen the industry’s expansion and performance.
“Despite these headwinds,” IATA said, “there is sustained demand for air travel, which should allow the market to maintain the same level of profitability in 2024,” the report said.
The aggregate net profit of the airlines this year is expected to be approximately 100 million US dollars, with 0.6 percent net profit margin. That is only $0.9 profit per passenger – a figure way lower than the $6.14 industry-wide.
Geopolitical dynamics are a key factor weighing on profitability this year, states the Global Outlook for Airport Transport.
Globally, IATA announced strengthened profitability projections for airlines in 2024 compared with its June and December 2023 forecasts. An aggregate return above the cost of capital, however, continues to elude the global airline industry.
The report said net profits are expected to reach $30.5 billion this year with 3.1 percent net profit margin. That will be an improvement on 2023 net profits which are estimated to be $27.4 billion.
Return on invested capital in 2024 is expected to be 5.7 percent, which is about 3.4 percentage points (ppt) below the average cost of capital.
Operating profits are expected to reach $59.9 billion in 2024, up from an estimated $52.2 billion in 2023.
Total revenues are expected to reach $996 billion up by 9.7 percent in 2024 – a record high – while total expenses are expected to reach $936 billion up by 9.4 percent in 2024 – a record high.
MG/abj/APA