Page 19 - World Airnews Magazine May 2021 Edition

AFRICA AFRICA

capability, which is particularly relevant to role in developing local economies

the African market, where it has the range and connecting them domestically and

flexibility to cover domestic, intra-African regionally, it comes as no surprise that

and international markets making it a truly these institutions tend to give extra

versatile aircraft.” importance to this sector.
While considerable growth continues “Local banks are also increasingly

to be expected, the Covid pandemic will relevant,” Piorino continues. “While they

clearly affect the figures in the OEMs’ may not have dedicated aviation finance

forecasts for these types in Africa, although teams, they know the airlines and the local

it may merely be a time shift. markets as well as having local currency

“The main consequence of the pandemic capabilities lacking from some foreign
has been a fall in demand that has strongly banks and ECAs. This can prove to be quite
affected all aspects of air transport in compelling for airlines.

Africa,” Houari confirms. “We anticipate “We therefore see good options to

that 2019 traffic levels could return support the introduction of new aircraft

by 2023 at best, or 2025 in the worst to African carriers. The fact that several

timeframe. airlines in Africa are also state-owned

“This short-term economic crisis does can facilitate financing with government
not mean the end of long-term economic guarantees being provided to enhance the

growth,” he stresses. “The fundamental security of these financing transactions.
drivers of economic growth in Africa have “Last but not least, lessors and
not changed. The resultant air traffic international banks are also paying

growth will be driven by demography, with close attention to this market and

a population expected to exceed 2 billion certainly want to participate more as

within 20 years, as well as by urbanisation the aviation markets and economies in

AFRICA READY FOR and middle class development. Inbound the region continue to develop,” Piorino Daniel Galhardo, director of strategy,
tourism and intra-Africa tourism will

comments, before adding the cautionary

continue to contribute to national note that revenues in local currency Embraer Commercial Aviation

and repossession risks are the greatest
economies and drive air traffic growth.

RIGHT-SIZED FLEETS We are confident that the A220 will play a challenges faced by financiers.

significant role in meeting the needs of air

Houari points out that, as with other
transport in Africa.” products in the Airbus portfolio, African

By Bernie Baldwin At Embraer, the feeling is that its airlines can benefit from various financing

forecast for these types in Africa, in sources. “Leasing companies have been

not breakthrough in Africa, the company Congo Airways for two E190-E2s and two terms of aircraft entering the system, very active in the aviation finance market,

does have examples of substantial fleets E195-E2s. has not changed much. “Although placing aircraft that they have on order

with Airbus or securing sale and leaseback
COVID affected all regions of the world,

t may not yet be considered a mature being successfully operated by carriers, At Airbus, one of the reasons why Mikail including Africa, we believe the need to transactions at time of delivery. Several of

Iaviati on market, but Africa is expected such as Airlink and Kenya Airways. Houari, president, Airbus Africa and address the aforementioned air transport them have been expanding their footprint

to be a huge area for growth in aircraft “The pre-owned market is very relevant Middle East, believes that his company’s inefficiencies on the continent will keep on the African continent over the past few

acquisition during the 2020s. One of the in Africa, probably more than anywhere offering in the crossover jet segment – the the demand for both regional jets and years,” he reports.
else in the world, and when we consider

features of that growth is likely to be the that, we see significant penetration for the A220 pairing – will sell better than RJs is crossover narrowbodies steady or even “Debt financing is also available through

ability of carriers to move straight to a segment,” he remarks. because right from the onset, the A220 was larger,” declares Galhardo. different instruments involving key players

right-sized fleet. “We believe crossover narrowbody designed specifically to address the market “Also, it is relevant to mention that if in the aviation finance market, such as

The classic narrowbody workhorses of jets will continue to fare better in the gap between RJs and single-aisles, with a you consider our most recent Market international commercial banks and

the Airbus A320 and Boeing 737 families market, primarily because it is a region fuselage cross-section optimised to address Outlook [2020-2029] numbers, the financial institutions that are customarily
the 100-to-150 seat market.

have led the way for many years, and with important inefficiencies to be continent is expected to have one of the engaged in the financing of Airbus

understandably so. However, below their overcome. For example, 66% of the total “In Africa, the potential market for largest new deliveries rates of crossover products,” he adds.

capacity level, there has arguably been less ASKs (available seat kilometres) are flown the A220 is a combination of aircraft jets (100) when compared to large “African airlines can also have access

structure in carriers’ fleets. by aircraft with more than 150 seats, but replacement (new replacing old), growth narrowbodies (110). to export credit support in line with the

(upsizing from smaller aircraft) and new

With the advent of the crossover more than half of those flights (55%) have One of the past challenges in selling OECD Aircraft Sector Understanding (ASU).

narrowbody jets such as the Airbus A220 fewer than 130 passengers per day (PPDs). operators,” Houari explains. “From the aircraft into Africa has been sourcing Export Development Canada (EDC) is the Mikail Houari, president, Airbus
Ascend April 2021 database, we identify a

family and Embraer E-Jets (at present, of So it is clear that those large narrowbodies potential market of around 450 aircraft: funding has never been easy in the African export credit agency supporting the A220 Africa and Middle East

course, in their second generation, the E2 are being sub-optimally, and expensively, market, so what do the OEMs think about while Bpifrance, Euler Hermes and UK

family), the gap has been filled between deployed,” Galhardo adds. Replacement of older regional jets (CRJ, the prospects of crossover jets attracting Export Finance support the other Airbus where a government will directly fund the
those workhorses and regional jets and “This leads to other issues for the region: E-Jet E1s, Avro, Fokker)- approximately 50 money for purchases? products.” aircraft purchase, acknowledging both the

turboprops. low frequencies for domestic and intra- aircraft. “First of all, export credit agencies (ECAs) Like Piorino, Houari highlights other relevance of the aircraft selected, as well

In fact, despite their ability to fly regional flights, leading to poor network Replacement of older single-aisles are expected to cover any gaps from the African financing solutions such as the as the critical role played by a national

reasonably lengthy sectors, regional jets connectivity; low load factors – on average, (737-300/-400/-500/-700, A319, A320) - private banking sector. Historically this aforementioned African Development carrier in the economic development of the

never sold in big numbers across Africa. the lowest in the world according to IATA; approximately 250 aircraft has been the case and now - especially Bank (AfDB) and Afreximbank, as well as country,” Houari states.

Although the current number of crossover and thus low profitability. We strongly Potential upsizing from smaller regional due to Covid - we expect ECA funding to the Trade and Development Bank (TDB), In all these cases, the OEMs are

narrowbody jets across the continent is believe crossover narrowbodies are the jets (ERJs, CRJs, Fokkers) - approximately bridge gaps,” remarks Matheus Piorino, whose mandates are to spur sustainable committed to helping customers find

still relatively small, there is considerable right-sized to address those issues,” he 150 aircraft. director customer finance, EMEA, Embraer economic development and social the most appropriate financing for their

optimism for sales figures much bigger than emphasises. “The A220 is ideally positioned to address Commercial Aircraft. progress. “Acknowledging the relevance needs, so if you’re flying in Africa once

the RJs achieved. The strategy director such a trend this market, not just in terms of size, but “Africa counts also on different of the A220 to the African air transport services get closer to the expected growth

Daniel Galhardo, director of strategy, is under way for Embraer aircraft with also with regards to its unique product multilateral banks that count on aviation market, they are likely to play a key role in path, be ready to fly on a crossover

Embraer Commercial Aviation, Nigeria’s Air Peace having firm orders for characteristics,” Houari claims. dedicated teams, such as Afreximbank providing or facilitating financing solutions narrowbody jet. Q

acknowledges that although in terms of 13 new E195-E2s, deliveries of have already “It offers true single-aisle comfort as and AfDB (African Development Bank). for it,” he predicts. https://aviationweek.com/special-topics/

new aircraft sale numbers, regional jets did begun, as well as four firm orders from well as the highest baggage and cargo As regional aviation plays a special “Finally, there is also the scenario

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