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How COVID-19 Led to $8.6 Billion Loss for African Airlines in 2021

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The report which shows how the COVID-19 Pandemic led to an $8.6b loss for African Airlines in 2021, also projects another loss of  $4.9 billion in 2022

The report compiled by African Airlines Association (Afraa) and obtained by Investors King reveals how strict travel restrictions by many African countries led to the depletion in revenue of most airlines in 2021.

The pandemic was a major determining factor for the progression of many sectors of the economy in 2021. And while for many, losses were accounted due to the novel COVID-19 virus, experts in the aviation sector believe that less stringent travel restrictions in 2021 would have reduced the losses incurred by many African airlines.

The pandemic heightened losses for many sectors in 2020 and by 2021, a number of these sectors were said to be slowly recovering from their losses. And although the $8.6b loss according to Afraa, is a little less than the $10.21 billion revenue loss recorded by 2020, the result still shows a 49.8% decline when compared to the revenue recorded by the sector prior to the pandemic in 2019.

Investors King also collected that the report by AFraa disclosed that while a loss of $8.6 billion was incurred in 2021, in 2022, another loss of  $4.9 billion may be incurred in 2022 owing to stricter travel restrictions and an ongoing crisis in Ethiopia.

The political crisis in Ethiopia may appear to have an even more devastating effect in the Eastern African region. According to the report, in 2021, only three African airlines continued with their international routes expansion across Ethiopia.

Other key takeaways from the report are the report on traffic for Africa Airlines and its projection as well as the report on safety practices for African Airlines under the year in review.

Traffic Projection

The report established that the pandemic reduced the traffic demands in 2020 and 2021, while also projecting a rise to meet the levels of 2019 before the pandemic. According to the report African airlines carried an estimated 43 million passengers in 2021 which represent around 45% of 2019 traffic while also projecting a rise in traffic by 67 million passengers in 2022

African Airlines Safety

The report went ahead to reveal that the total number of fatal accidents involving commercial airlines in 2020 were 5 – of which resulted in 301 fatalities. This is a welcomed improvement when compared to 2019, where there were 8 fatal accidents with 249 fatalities. According to the report, these accidents are notably from airline fatal accident records outside Africa, as no fatal accidents occurred in the African region or involved African regular carriers.

The report commended many African governments and aviation stakeholders for their efforts in ensuring that safety measures are carried out by various airlines operating in the regions. According to the report, under the year in review, there are 43 airlines registered in the (International Air Transport Association ) IATA Operational Safety Audit (IOSA).

Owing to the incurred loss in revenue, The AFRAA Secretariat continues to advocate for financial support to African airlines owing to the critical effect of the COVID-19. Investors King recalls that as of October 2021, a total of US$2.9 billion in various forms of support was extended to some airlines by their governments. The most African government to announce such according to the report is the Mauritius Government.

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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness - Investors King

Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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