An Ethiopian Airlines Airbus 350-900. © Fabrizio Gandolfo / SOPA Images / Sipa Ethiopian Airlines and South Africa’s Airlink are well positioned to emerge as African industry winners from the Covid-19 pandemic, analysts say.
The outlook for South African Airways (SAA) and Air Mauritius , meanwhile, is bleak.
No African airline will emerge from the pandemic unscathed, says Indigo Ellis, associate director at Africa Matters in London. Passenger numbers are less than half their pre-2020 levels, and industry losses to January 2021 are estimated at more than $10.5bn. This, Ellis notes, is despite a return to relative normalcy in some domestic markets over the past three months.
The article continues below Free download
Get your free PDF: Top 200 banks 2019
The race to transform
Complete the form and download, for free, the highlights from The Africa Report’s Exclusive Ranking of Africa’s top 200 banks from last year. Get your free PDF by completing the following form
Travel restrictions to the UK and the US for most arrivals from Southern Africa mean the picture is “bleak” for many carriers, with limited prospects for government bailouts, says Ellis.
Neither SAA nor Air Mauritius have enough cash to stay afloat. Ellis explains: “Governments are simply not able to offer the kind of liquidity that the aviation sector requires.” It is unlikely that some of the smaller pan-continental carriers like Kenya Airways or RwandAir will resume the volume of flights to Europe they had before, she adds. Who will be strongest?
Airlines with diverse revenue streams are in a stronger position: Ethiopian Airways is strengthened by the fact that it capitalised on cargo opportunities early on, says Marcel Langeslag, director of African aviation at Netherlands Airport Consultants in Johannesburg.
Ethiopian has also been able to keep a relatively high number of international connections running through its hub in Addis Ababa, he says. Ethiopian may be content with its new partnership with smaller South African player CemAir rather than riding to the rescue of SAA, but it is still in the running for a takeover of Air Mauritius, Ellis says. In South Africa, Langeslag argues that Airlink will perform well on the basis of its code-sharing agreements. In January, Lufthansa and Swiss International Air Lines partnered with Airlink on domestic South African routes. Survival by Default One point in favour of African airlines is the distances to be covered and the lack of usable infrastructure for alternatives such as train and […]