African airlines’ profit projected to hit $100m in 2024 — lower than global benchmark

The International Air Transport Association (IATA) says the profit of African airlines’ is estimated to reach $100 million in 2024.

In a statement on Tuesday, IATA said the result reflects the sector’s resilience in its post-COVID recovery.

However, the association said the estimated $100 million profit amounts to a meagre 90 cents per passenger, significantly lower than the global average of $6.14.

Kamil Al-Awadhi, IATA’s regional vice-president for Africa and the Middle East, said the significant challenges facing African aviation include infrastructure deficiencies, high costs, and taxation.

He said the sector must address these issues to meet travel demand.

“Africa’s airlines are making a collective profit. That is good news. But it is razor-thin and well below the global benchmark,” Al-Awadhi said.

“There are wide variations across the continent where many individual airlines still struggle with losses.

“The demand to travel is there. To meet it, the African airline sector needs to overcome many challenges, not least of which are infrastructure deficiencies, high costs, onerous taxation, and the failure to broadly implement a continent-wide multilateral traffic rights regime.

“The challenges facing African aviation are significant, but they are not insurmountable.”

According to IATA’s 2024 financial outlook highlights, the projected $100 million net post-tax profit of African airlines marks the second year of profits since the COVID crisis.

“Profit per passenger is expected to reach USD 0.9, nearly doubling the 2023 figure of $0.5, reflecting improved operational efficiency and increased demand, but well behind the global average of $6.14,” the association said.

“Profit margins are anticipated to be 0.6% of revenue, up from 0.4% in 2023. This remains significantly lower than the global net profit margin of 3.1%.

“Revenue Passenger Kilometers (RPK) growth is forecasted at 8.5%, indicating continued strong passenger demand across the region. This does, however, lag behind the expected growth in capacity of 9.1%.

“The load factor is expected to reach 61.9%, slightly ahead of the 59.8% breakeven load factor for African Airlines.”

‘BLOCKED FUNDS IN AFRICA COUNTRIES NOW $880 MILLION’

The aviation body said the development of connectivity in Africa also requires certainty that markets will abide by global standards with respect to the repatriation of funds from sales activities.

Airlines, the group said, still struggle with the inability to repatriate blocked funds efficiently and in line with international agreements and treaty obligations in several African markets.

IATA said the amount of blocked funds in African countries in June 2024 stood at $880 million — just over 52 percent of the $1.68 billion in blocked funds globally.

This, according to the association, is an improvement after Nigeria cleared 98 percent of the total $831 million funds blocked.

IATA said the top five countries in Africa with blocked funds include Algeria with $261 million, followed by XAF Zone ($140 million), Ethiopia ($115 million).

Others include Eritrea at $75 million, and Zimbabwe at $69 million.