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COVID19 crisis leaves African Airlines in deep trouble

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  • As on March 11, airlines in Africa had accumulated losses worth $4.4 billion.
  • Emergency support sought to bailout Airlines from the mounting losses due to cancellation and disruptions of flights.

IATA (International Air transport Association) , has sought emergency support to airlines to bail them out from the mounting losses due to the cancellation and disruptions of flights caused by the Covid-19 . As on March 11, airlines in Africa had accumulated losses worth $4.4 billion.

Muhammad Al-Bakri, IATA’s vice-president for the Middle East and Africa said that though extensive cost-cutting measures were being implemented by the region’s carriers to mitigate the financial impact of Covid-19, the flight bans and travel restrictions, have led to plummeting airline revenues —outstripping the scope of even the most drastic cost-cutting measures.

South Africa tops the losses with projections pointing to a six million contractions in passenger numbers and financial losses of $1.2 billion with job losses of 102,000. Ethiopian Airlines, the most expansive airlines of Africa, suspended its flights to 30 countries due to coronavirus, effective from Friday March 20. Earlier, Ethiopia had maintained a decision to stick to its China route at a time when most African airlines had suspended operations to and from the country. According to experts, the losses incurred by Ethiopian Airlines stood at $190 million risking 98,400 jobs. Nigeria is expected to suffer an 853,000 drop in passenger numbers and $170 million in revenues. For Rwanda, IATA, has projected a dip in the passenger’s volumes by 79,000 and revenue loss of $20.4 million while 3,000 jobs would be at risk. But potential losses could expand to 201,000 passengers and $52 million in foregone revenues. He added that airline cash reserves averaged just about two months in the region, facing liquidity and existential crisis. According to the estimates of IATA the aviation industry will need $200 billion in aid globally to prevent total collapse.

IATA is proposing that the governments consider direct financial support to airlines to make up for the loss in revenues and liquidity attributable to travel restrictions associated with Covid-19. The support also could cover loan guarantees and support for the corporate bond market by central banks, tax relief through rebates on payroll taxes paid so far in 2020 or an extension of payment terms for the rest of the year.

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