August 1, 2019 / 1:34 PM / 24 days ago

Factbox: African governments struggle to turn around loss-making airlines

(Reuters) - Governments from Kenya to South Africa are struggling to turn around loss-making state-owned airlines through restructuring or by bringing on board private partners.

Ethiopian Airlines has bucked the trend, providing a model that Kenya hopes to emulate by renationalising its flag carrier.

Following is a summary of the financial position of major African airlines and selected nationalised carriers globally:

AIR TANZANIA

It posted a net operating loss of 16.21 billion shillings ($7.1 million) in 2016/17 (July-June), down from a loss of 38.72 billion in 2015/2016, according to the latest report from the government’s chief auditor general.

AIR ZIMBABWE

The airline owes creditors $350 million and has not published financial results in nine years. Its monthly losses totalled $2 million in 2017, government figures showed.

FLEET SIZE: 6 (Only one in service)

ETHIOPIAN AIRLINES

The airline posted operating revenue of $3.7 billion in its 2017/18 financial year, a 43% rise on the previous year. Its net profit rose to $233 million from $229 million in 2016/17.

FLEET SIZE: 116 (Has 59 aircraft on order)

NUMBER OF DESTINATIONS: 143

PASSENGER NUMBERS: 10.63 million

KENYA AIRWAYS

The airline reported revenue of 114.45 billion shillings ($1.1 billion) for the year to December 2018, up from 106.17 billion a year earlier, while narrowing its pretax loss to 7.59 billion shillings from 9.44 billion.

NUMBER OF DESTINATIONS: 56

PASSENGERS CARRIED: 4.84 million

SOUTH AFRICAN AIRWAYS

State-owned South African Airways (SAA) has not made a profit since 2011. Its revenue was 30.7 billion rand ($2.2 billion) in the 2016/17 year when it suffered a 5.6 billion rand loss.

SAA launched a revised five-year turnaround plan that includes slashing costs and cancelling unprofitable routes, requiring around 21.7 billion rand in cash injections from the government. The following figures are for the year ended March 2017:

NUMBER OF DESTINATIONS: 41

PASSENGERS CARRIED: 9.7 million

UGANDA AIRLINES

The revived national carrier plans to make its maiden flight in August. Expected operating costs are $70 million over the next two years, Chief Executive Ephraim Bagenda told Reuters.

Uganda Airlines was liquidated in the 1990s under a programme to privatise troubled state firms and open up the economy to private enterprise. But last year officials started pursuing plans to relaunch the airline to share in East Africa’s growing aviation business.

FLEET SIZE: 2 (4 more expected by January 2021)

PASSENGERS CARRIED: 0

Renationalising a failing airline has had mixed results elsewhere in the world.

ARGENTINA

Argentina expropriated Aerolineas Argentinas in 2008, alleging mismanagement. The nation paid less than a dollar to the owner, Spanish travel group Marsans. A decade later, the airline has increased its passengers and destinations, but competition from low-cost rivals means it is still loss-making. The World Bank’s arbitration tribunal ruled in 2017 that Argentina must pay Marsans compensation.

MALAYSIA

Malaysia’s sovereign wealth fund in 2014 took over Malaysia Airlines, which was doing poorly even before two major crashes that year. Efforts to revive it have been unsuccessful, despite cutting jobs and installing new chief executives from Germany, Ireland and Malaysia. The airline is still losing money and is up for sale again, although there are reports that the government will keep a golden share and bar further job cuts.

NEW ZEALAND

The government took an 80% stake in Air New Zealand after an Australian airline it bought in 2000, Ansett, collapsed the following year. The government has allowed Air New Zealand to be run like a private company and has been slowly divesting, now owning just over 50%. The airline expects to make NZ$340 million ($223 million) before tax this year. Its credit rating benefits by one notch from the government’s support.

Reporting by Elias Biryabarema in Kampala, Fumbuka Ng'wanakilala in Dar es Salaam and MacDonald Dzirutwe in Johannesburg; Writing by George Obulutsa; Editing by Nqobile Dludla and David Holmes

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