Covid-19: African Airlines face N2.5trn loss

Chinazor Megbolu

The International Air Transport Association (IATA) has said that African airlines may face loss of at least $6 billion (N2.6 trillion) over Covid-19 pandemic which has grounded activities on the continent two months back.

The association on Thursday explained that Nigerian carriers also risk about N390 billion revenue loss, 4.7 million fewer passengers, 125,400 jobs and $0.89 billion in contribution to Nigeria’s economy this year due to Covid-19 pandemic.

The Regional Vice President for Africa and the Middle East, IATA.
Muhammad Al Bakri, pointed out that IATA has appealed to development banks and other sources of finance to support Africa’s air transport sectors which are now on the verge of collapse.

He explained that airlines on the continent are struggling for survival, buttressing that Air Mauritius had entered voluntary administration while South African Airways and SA Express are in business rescue respectively.

Bakri posited that other distressed carriers have placed staff on unpaid leave or signalled their intention to cut jobs, warning that more airlines would follow suit if urgent financial relief was not provided.

He stated that the economic damage of a crippled industry extends far beyond the sector itself, noting that aviation in Africa supports 6.2 million jobs and $56bn in GDP.

Bakri said IATA is seeking the intervention of the Federal Government on relief measures for the continent’s carriers and noted that IATA expected revenue loss to the continent’s carriers was $2 billion (about N800 billion), which is more than the expectations at the beginning of the month.

On job losses in aviation and related sectors, Bakri noted this could grow to 3.1 million, adding that this was half of the region’s 6.2 million aviation-related employment.

He further estimated that the aforementioned could also lead to 2 million job loss for workers on African continent.

Bakri, however, hinted that the full-year 2020 traffic is expected to plummet by 51 per cent compared to 2019, stressing that the previous estimate was a fall of 32 per cent.

He added that the Gross Domestic Product (GDP) being supported by the aviation sector in the region could fall by $28 billion from $56 billion compared to the previous estimate, which was $17.8 billion.

Moreover, Bakri averred that these estimates were based on a scenario of severe travel restrictions lasting for three months, with a gradual lifting of restrictions in domestic markets, followed by regional and intercontinental.

Meanwhile, the association has called for a mixture of direct financial support loans, loan guarantees and support for the corporate bond market tax relief respectively.
Editing by ‘Biodun Soyele