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How to save African airlines?

In a strategic study, the Economic Commission for Africa of the United Nations gives leads to save the airlines of Africa, plagued by serious financial difficulties.

The United Nations Economic Commission for Africa recently published a strategic study on “African airlines in the context of the Covid-19 pandemic”. And the caption of this document is clear: Companies are faced with a serious problem, that of having to "overcome a liquidity crisis". In other words, with the pandemic that has pinned planes to the ground, the African airline industry is in the red.

Question numbers, the United Nations Economic Commission for Africa recalls that "air transport represents more than 7 million jobs and contributes more than 70 billion dollars to the economy of the continent". And "the collapse of African airlines will have disastrous economic consequences", we can read in the document, very pessimistic about the survival of African companies.

Before the health crisis, airlines carried 76,6 million passengers in Africa each year. And while an increase to 303 million passengers is expected by 2035, it is clear that Africa is not ready to take up the challenge: the aviation industry "only represents 3% of the market. global ”, indicates the study which cites the Sierra Leonean, Guinean, Central African, Beninese, Malian, Rwandan, Togolese, Ugandan, Zambian and Madagascan markets as being the most important in terms of growth.

"Rebuild, for better"

The problem of airline debt seems insoluble in Africa. And the report puts forward a staggering figure: "The total financial needs of African airlines would be well over $ 3,2 billion if we added to the figure the cumulative debt of all the continent's airlines, their operating costs. and their other commitments ”. The pandemic has worsened the situation: revenue losses in 2020 could be between $ 10 billion and $ 13 billion, according to forecasts by the International Civil Aviation Organization (ICAO). Debts owed mainly to banks, financial institutions and leasing companies.

Faced with this major financial crisis, what are the solutions? For the United Nations Economic Commission for Africa, the public authorities have a role, that of "integrating airlines into national response strategies to the Covid-19 pandemic". The study also mentions the African Union response fund the possibility for some African countries to benefit from a limited time suspension of debt service payments.

The UN Commission affirms that it is necessary to quickly "choose the appropriate options for the provision of financial support to airlines", "adapt the financial support to the specificities of the airlines", "allocate part of the Covid aid- 19 to airlines ”,“ coordinate collaboration between development finance institutions and airlines ”and finally“ offer commercial opportunities to airlines ”to“ rebuild, for the better ”, this sector stricken by the pandemic.

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