Following a survey conducted jointly by the Economic Commission for Africa (ECA) and the Association of African Airlines (AFRAA) to quantify the indebtedness of African airlines in the face of the impacts of COVID-19, a report on the financial impact of the COVID-19 pandemic on African airlines and information on the recovery from the liquidity crisis has been released.
Double COVID-19 Policy Research Paper and African Airlines Overcoming a Liquidity Crisis ”, the report focuses on airline indebtedness to banks, financial institutions, aircraft leasing companies and aircraft manufacturers.
It therefore highlights the financing options and cost structures of airlines, which form the basis of much needed financial support campaigns.
The added value of the document lies in its global perspective, which consists of analyzing, through a funding lens, the challenges induced by COVID-19 facing African airlines as well as the efforts undertaken to meet these challenges.
the report reveals huge differences in the size and structure of airline debt. This suggests that a one-size-fits-all solution may not be appropriate to meet their liquidity challenges. Financial support must therefore be adapted to the specificities of the airlines.
AFRAA Secretary General Abdérahmane Berthé said: “AFRAA, in collaboration with industry players and air transport organizations, continues to advocate for direct government support to airlines and for they create a platform to coordinate their efforts for the survival of the industry, in particular by connecting airlines and financial institutions and facilitating access to available funds. ”
AFRAA has also appealed to development finance institutions to establish facilities to help mitigate the impact of the pandemic on vital sectors of economies in countries on the continent.
AFRAA estimates that African airlines recorded a loss of revenue of $ 10.21 billion in 2020 due to the impacts of the pandemic.
“Financial support for the industry is essential to its survival. Some of the measures that we call on governments to implement include: granting grants, loans and loan guarantees, issuing equity and also postponing or canceling payments of debts, rents, charges and taxes by airlines, ”added Berthé.
The report further outlines strategies and plans for the survival, recovery and sustainability of the industry. Although the aviation system is multidimensional, the report focuses on airlines, many of which face insolvency as their operations halted due to travel restrictions aimed at curbing the spread of the pandemic.