Coronavirus has been ‘very devastating’ for many African airlines

Coronavirus has been ‘very devastating’ for many African airlines
Without solid state support while grappling with how to comply with new safety guidelines, Uganda Airlines ‘may as well go home,’ said Francis Babu, a former government minister. (AP)
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Updated 03 June 2020

Coronavirus has been ‘very devastating’ for many African airlines

Coronavirus has been ‘very devastating’ for many African airlines
  • African airlines had been piling on debt long before the pandemic but government bailouts allowed them to limp on for years
  • In some cases, local airlines are so important for pan-African business on a vast continent with historically poor infrastructure

KAMPALA, Uganda: A “new baby” was born with the revival of Uganda Airlines, the country’s president announced last year. But now its four new jets sit idle, business suspended indefinitely because of coronavirus-related travel restrictions.
Questions are swirling in Africa and elsewhere over the financial wisdom of sustaining prestige carriers that often have a tiny share of an aviation market that sees no recovery in sight.
African airlines had been piling on debt long before the pandemic but government bailouts allowed them to limp on for years. Now, as sub-Saharan Africa faces its first recession in a quarter-century, some airlines will find it harder to survive. That’s despite growing global interest in the continent of 1.3 billion people.
In some cases, local airlines are so important for pan-African business on a vast continent with historically poor infrastructure that their collapse would cripple speedy travel. In other cases, however, airlines have been seen as vanity projects for states that can hardly afford to support them.
Nowel Ngala, commercial director of Asky Airlines — a carrier launched in 2010 by a group of regional banks hoping to solve transport difficulties in central and West Africa — said the pandemic has been “very devastating” to the company, whose nine aircraft are grounded. Revenue losses are substantial and there have been “serious impacts in terms of maintaining” the planes for whenever business resumes.
The International Air Transport Association in April warned that African airlines could lose $6 billion in passenger revenue compared to last year, and half of the region’s 6 million jobs in aviation and related industries could be lost. Air traffic this year is expected to fall by half, it said.
“These estimates are based on a scenario of severe travel restrictions lasting for three months, with a gradual lifting of restrictions in domestic markets, followed by regional and intercontinental,” the IATA said.
That three-month period is already nearing an end, with no return to normal air travel in sight.
Even Ethiopian Airlines, Africa’s only profitable airline in recent years, has signaled distress, citing revenue losses of up to $550 million between January and April. As a survival measure, the airline has thrown itself into cargo operations, including shipping medical supplies across Africa and to other continents.
“Some 22 of our passenger aircraft have been converted to cargo,” CEO Tewolde Gebremariam told The Associated Press. “Once the pandemic is brought under control and passenger flights resume, we will configure them back into their original passenger cabin configurations.”
If the crisis lingers, he said, “we will discuss with our owner, the Ethiopian government, on how to manage the situation going forward, and we may also discuss with our creditor banks for liquidity loans.”
Addis Ababa, Ethiopia’s capital, has become Africa’s gateway to Gulf nations and beyond. Now it is a key hub for shipping humanitarian supplies during the pandemic.
Another major African airline, South African Airways, hasn’t been profitable since 2011 and has been under bankruptcy protection since December. Tired of issuing bailouts, the government is demanding a new business plan.
“We are now faced with the unknown post the COVID-19 pandemic and there is no precedent or certainty which can be followed in developing a new strategy,” the department of public enterprises announced on May 1, saying the airline will be restructured. Administrators aim to lay off nearly 5,000 employees to keep the airline afloat.
“Airlines that were struggling before the pandemic will likely end up filing for bankruptcy or seek bailouts,” the United Nations Economic Commission for Africa has warned, calling air transport a critical sector for the continent’s economy, along with tourism, as global ties and investment have grown.
The revived Uganda Airlines barely had the chance to get started.
Without solid support from the state while grappling with how to comply with new safety guidelines, Uganda Airlines “may as well go home,” said Francis Babu, a pilot and former government minister. The airline’s CEO and spokesman did not respond to requests for comment.
In neighboring Kenya, Kenya Airways CEO Allan Kilavuka has been blunt.
“Even before this crisis we were not in a good place,” he told the Metropol television channel on May 6. The airline’s business model and market approach will need to change, he said. But asked how he sees Kenya Airways coping after the pandemic, he replied: “No one knows.”
Employees have taken pay cuts of up to 80 percent as Kenya Airways undergoes a re-nationalization process started last year to help it return to profitability. In February the airline received a government loan of nearly $5 million to overhaul its fleet’s engines.
A further cash infusion from the state is needed, Kilavuka said, “anything that you can afford.”
The company’s growing debt is one reason that Aly-Khan Satchu, a financial analyst based in Nairobi, believes that authorities will need to create another version of Kenya’s flag carrier “with a clean balance sheet.”
Kenya Airways, which depends on passenger traffic for 90 percent of its revenue, will have to pivot to cargo and reduce its network to create an agile state carrier, he said. “I appreciate it serves a national interest function but the balance sheet has now crossed a tipping point.”
In Rwanda, the government said it will increase its funding to national carrier RwandAir, whose cost-trimming includes pay cuts of up to 65 percent and the suspension of contracts with some pilots and non-essential staff until further notice.
Times are even harder for Air Zimbabwe, the one-plane national carrier of the southern African nation, saddled with debt of more than $300 million even before the pandemic. The airline said in April it was forcing dozens of employees into unpaid leave until the Boeing 767 can fly passengers again.


Egypt aims to double funding for green projects

Egypt aims to double funding for green projects
Updated 10 min 20 sec ago

Egypt aims to double funding for green projects

Egypt aims to double funding for green projects

CAIRO: Egypt is planning to double the state’s funding for green projects to 30 percent of its overall investment plan during the fiscal year 2021/2022 and to raise it to 50 percent by 2024/2025.

Sherif Daoud, deputy head of the Sustainable Development Unit at the Egyptian Ministry of Planning and Economic Development, said green projects currently represent 15 percent of the state’s investment plan during the current fiscal year 2020/2021.

Daoud said green projects focus on the transport, housing, and electricity sectors. 

He said the government is preparing a package of incentives to encourage the private sector to participate more in the green economy. He said the first national report on financing sustainable development projects is also being prepared. 


AlUla awards $14m housing complex contract

AlUla awards $14m housing complex contract
Updated 16 June 2021

AlUla awards $14m housing complex contract

AlUla awards $14m housing complex contract
  • The project, which consists of 150 modular, high-quality and furnished units, is scheduled to be completed in three months

RIYADH: Red Sea International Co. said it won a SR52.9 million ($14.1 million) contract to design and build a housing complex in AlUla, northwest Saudi Arabia.

The contract for 150 “modular, high-quality and fully furnished accommodation units” was awarded by the Royal Commission for AlUla (RCU) and is expected to be complete in three months, Red Sea International said in a filing to the Tadawul stock exchange on Wednesday.

AlUla is home to the archeological site of Dadan, which is being developed into a cultural tourist destination.

Dadan, a civilization that dates back more than 2,700 years and pre-dates the Nabataean civilization as well as the Roman presence in the Arabian Peninsula, was once the capital for the Dadan and Lihyan Kingdoms and is considered to be one of the most developed 1st-millennium BCE cities of the Arabian Peninsula.

In April, Amr AlMadani, CEO of the RCU, the entity set up by the Saudi Ministry of Finance in July 2017 to manage the development of the site, told Arab News the commission has invested $2 billion in initial seed funding for the initial development of the historical development area. A further $3.2 billion, which will come from public-private partnerships, has also been earmarked for spending on priority infrastructure ahead of the completion of phase one of the project in 2023.

“We are well into executing phase one. This includes the upgrade of the airport, which has been completed. We will start our low-carbon tram development infrastructure as well. And, so far, our visitor experience centers in the heritage and nature site are being upgraded,” AlMadani said.

The “Journey Through Time Masterplan” was recently announced by Crown Prince Mohammed bin Salman. Upon completion in 2035, the development project aims to create 38,000 new jobs, attract 2 million visitors a year, expand the population of the area to 130,000, and contribute $32 billion to the Kingdom’s economy.


Dubai-based Luxury Closet raises $14m for thrifty lovers of luxury

Dubai-based Luxury Closet raises $14m for thrifty lovers of luxury
Updated 16 June 2021

Dubai-based Luxury Closet raises $14m for thrifty lovers of luxury

Dubai-based Luxury Closet raises $14m for thrifty lovers of luxury

RIYADH: The Luxury Closet, an online platform for buying and selling used high-end goods, secured fresh financing worth $14 million to bankroll the company’s expansion outside the UAE, Bloomberg reported.
The Dubai-based startup is raising funds for international expansion by marrying luxury with thrift.
The financing is led by GMP Capital, alongside international and local investors including Huda Beauty Investment.
“Re-sale is the future of shopping,” said Kunal Kapoor, chief executive and founder of The Luxury Closet. 
“We expect one in six transactions to be pre-owned by the end of the decade,” he added.
Gulf spending on the resale market was among the highest before the pandemic,according to Bain & Co.
But spending on the local luxury market fell by 17 percent afterward.


Egypt, UK discuss cooperation in electricity sector

Egypt, UK discuss cooperation in electricity sector
Updated 16 June 2021

Egypt, UK discuss cooperation in electricity sector

Egypt, UK discuss cooperation in electricity sector
  • Trevelyan is on her first visit to Egypt since assuming her post
  • During their meeting, Shaker praised cooperation between his ministry and British firms

CAIRO: Egypt’s Minister of Electricity and Renewable Energy Mohamed Shaker met with Anne-Marie Trevelyan, British minister of state for business, energy and clean growth.
They discussed how the two countries can enhance cooperation in the electricity and renewable energy sector.
Trevelyan, who is also UK representative for the 2021 UN Climate Change Conference, is on her first visit to Egypt since assuming her post. She will discuss preparations for the conference, set to be held in Glasgow in November.
During their meeting, Shaker praised cooperation between his ministry and British firms, saying they are trusted partners who play a huge role in the electricity sector and in helping achieve the goals of the Egyptian Energy Strategy 2035.


Saudi Arabia co-chairs meeting on restructuring Chad’s debts

Saudi Arabia co-chairs meeting on restructuring Chad’s debts
Updated 16 June 2021

Saudi Arabia co-chairs meeting on restructuring Chad’s debts

Saudi Arabia co-chairs meeting on restructuring Chad’s debts
  • Chad is the first country to request the restructuring under the new Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative

RIYADH: Saudi Arabia has co-chaired the fourth creditor committee meeting to help Chad restructure its debts under a new G20 framework.

The African state requested the restructuring in January as it struggled with a high debt burden exacerbated by the coronavirus disease (COVID-19) pandemic.

Chad is the first country to request the restructuring under the new Common Framework for Debt Treatments beyond the Debt Service Suspension Initiative. The framework was agreed in November by the G20 under Saudi Arabia’s presidency and the committee held its first meeting in April this year.

Saudi Arabia co-chaired the June 10 virtual meeting with France. The other committee members also included China and India, while representatives from the International Monetary Fund (IMF) were also present as observers.

“The creditor committee supports Chad’s envisaged IMF upper credit tranche program and its swift adoption by the IMF Executive Board to address Chad’s urgent financing needs. The creditor committee encourages Multilateral Development Banks to maximize their support for Chad to meet its long-term financial needs,” the committee said in a press statement.

The statement added that committee members “are committed” to negotiate with Chad to restructure its debts.

The committee highlighted that it was important that private sector creditors be offered “debt treatments on terms at least as favorable as those being considered by the creditor committee, in line with the comparability of treatment principle.”

The IMF in January completed initial talks with Chad on a new medium-term financing program worth about $560 million. According to the IMF, Chad’s total debt amounted to $2.8 billion, or 25.6 percent of gross domestic product (GDP), at the end of 2019. China is its largest official bilateral creditor, according to a report by Reuters.