Eight airlines in Africa filed for bankruptcy or entered business administration over the past 12 months despite a handful receiving more than $2 billion in government aid.
African airlines have felt the impact of the COVID-19 crisis particularly hard despite receiving direct government loans, equity financing and cash injections.
Over $30bn has been pledged for air transport and tourism in Africa by International finance agencies and other institutions including the African Development Bank, African Export Import Bank, African Union and the International Monetary Fund (IMF).
However, most of this relief is yet to reach the airlines and other aviation stakeholders in need.
On top of this $601 million in airline funds remains blocked in Africa across 17 countries – including Algeria, Angola, Benin, Burundi, Central African Republic, Eritrea, Ethiopia, Equatorial Guinea, Malawi, Mozambique, Nigeria, Sudan, Gabon, Cameroon, Chad, Congo and Zimbabwe – putting further pressure on airlines as they struggle for survival.
The International Air Transport Association (IATA) has outlined three priorities for African governments to ensure that the airline, travel and transport industry survives the COVID-19 crisis and is able to support economic recovery, growth and development throughout the continent.
The three priorities are continued financial relief and the release of committed aid and blocked funds, safe reopening of borders and planning for the safe restart of operations.
“African airlines posted a combined $2bn loss in 2020,” said Kamil Al Awadhi, IATA Regional Vice President Africa and the Middle East.
“This year we expect only a slight improvement ($1.7bn loss) as the struggle with COVID-19 continues. Looking ahead it’s unlikely that traffic will return to post COVID-19 levels until 2023. Financial relief measures are still desperately needed, particularly those that do not increase the industry’s debt burden. Additional relief measures and activating existing pledges are essential.
“Government relief comes in many forms. Cost reductions in terms of taxes and charges will help. And the release of the $601 million of airline revenues that are currently blocked from repatriation in certain governments would be an immediate boost in some markets.
“Governments will need a financially viable air transport sector to energize economic recovery from COVID-19. Many of Africa’s airlines were weak even before the crisis. Reducing costs and freeing blocked cash has long been a priority for African aviation. If ever there was a time for decisive government action on these issues, it is now,” said Al Awadhi.
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