Airlines concede to a challenging business environment that has seen a rise in costs, cutbacks in capacity and a revision of business projections to adjust to the new market realities. PHOTO | SHUTTERSTOCK Executives at Kenya Airways, RwandAir and Uganda Airlines all concede to a challenging business environment that has seen a rise in costs, cutbacks in capacity and a revision of business projections.
IATA says while the transition from cash-burn to cash-generation was in sight, the next six months would be difficult for airlines.
It is back to the drawing board for airlines in East Africa as a resurgence of Covid-19 further disrupts global travel amid the need to save jobs while turning cash positive.
Executives at Kenya Airways, RwandAir and Uganda Airlines all concede to a challenging business environment that has seen a rise in costs, cutbacks in capacity and a revision of business projections to adjust to the new market realities.
In its first briefing for the year on January 12, the International Air Transport Association (IATA) said that while the transition from cash-burn to cash-generation was in sight, the next six months would be difficult for airlines.
“While we still see airlines turning cash positive within the year, the near-term picture is bleak. Instead of a boost from the year-end holiday period, we got even more restrictions. Governments tightened borders in a knee-jerk response to a virus mutation. Canada, UK, Germany, Japan and others added testing to their Covid-19 measures without removing quarantine requirements. In other words, they have chosen policy measures that will shut down travel,” said IATA chief executive Alexandre de Juniac.
While castigating governments for a fixation with achieving a zero-covid world, he warned that a failure to manage a balanced approach to the risks of Covid-19 would see the travel and tourism economy continue to suffer and incur job losses.
IATA added that while business confidence had recovered in major Western markets, the challenges for air travel are visible in sub-par airline share prices. According to the Reuters Global Airline share prices index, airline share prices are still trending negative 25 percent below their value during the same period in January 2020.
While cargo has been a lifeline for many, IATA reports that African airlines saw demand shrink by 1.7 percent year-on-year in November, reversing three months of positive year-on-year growth. The drop was primarily driven by soft performance on the Asia-Africa route, which was down 4.5 […]
