Four African Airlines have began talks to create an alliance. This is help them mount stiffer competition in the airline industry in Africa.
The four are troubled South African Airways, Kenya Airways, Air Mauritius and Rwanda Air.
Aviation experts believe the alliance if formed could allow the airlines to create a consolidated network using the individual strengths of each to offer passengers more value for money.
Kenya Airways for instance has recorded losses for three consecutive years and is currently going through restructuring.
Reports say the East African airline last year agreed to convert $405 million owed by the National Carrier into equity, giving the state a controlling stake and diluting other shareholders, including Air France KLM.
South African Airways on the other hand received some $1.4 billion loan offer in return for a 51 percent stake in the cash trapped State Owned airline.
The East African reports that “the four are expected to formally announce the joint venture before the New Year.”
Meanwhile African carriers are expected to report a $300 million net loss in 2019 (slightly improved from the $400 million net loss in 2018).
The expected net loss per passenger is $3.51 (-2.1% net margin). This makes Africa the weakest region, as it has been over the past four years. Performance is improving, but only slowly.
Losses are expected to be cut in 2019 as fuel prices decrease. The region benefits from higher-than-average yields and lower operating costs in some categories.
However, few airlines in the region are able to achieve adequate load factors to generate profits.