TAAG Angola Airlines posted a net loss of $12 million for the first half of 2017, substantially widened from the year-ago figure of $0.5 million. However, the airline said the increased deficit was because of a reduced fuel subsidy from the Angolan government and that operational results were considerably improved.

However, the carrier said the latest results were considerably better than typical historical losses for the first half, which had exceeded $150 million in some years.

In the six months to June 30, passenger revenue grew 16% over the previous year, while cargo volumes grew 78%.

Angola’s national airline gave no detailed figures, but the latest results represent something of a rebound from previous years. Angola is heavily dependent on the oil industry and has been badly hit by the slump in prices for the commodity in recent years. It has also been affected by a severe lack of foreign currency.

Until earlier this month, TAAG Angola was managed by a team from Emirates Airline, but CEO Peter Hill and several colleagues left after Emirates lost patience with trying to repatriate blocked revenues from its own airline operations from the southwest African nation. ATW understands that the Emirates team, with the exception of Hill, has now returned to assist TAAG through the transition process.

The airline said the main reason for the loss over the past six months was a provision of $21 million for unpaid tax liabilities in overseas stations relating back to 2010. “Even though management has been able to successfully negotiate a deferred settlement plan, full provision has been made in the financial statements,” the Luanda-based airline said in a statement.

“Combined with continuing progress in controlling overheads and other costs, the result of operations was much better than budget for the same period. However, reduction in the receipt of the fuel subsidy from the government (paid because of Angola’s much higher prices for fuel) prevented the airline making a profit in the first half.

“If not for the reduction in fuel subsidy and the provision made for the tax liability, the airline would have been profitable.  

“The challenges we encountered during the last two years, such as the shortage of foreign currency to pay our overseas suppliers and the market uncertainty as a result of Angola’s economic crisis, will continue in the short term and will make our business extremely difficult,” CFO Vipula Gunatilleka said.

“We knew 2017 would be a big challenge. But we continue to focus on reducing costs, while at the same time increasing salaries for our staff; and we have been successful in steadily gaining market share while being competitive in our pricing.

“In spite of these challenges, with both the August and December peak travel seasons included in the second half, we will be doing our very best to deliver a much-improved financial result for the year,” he said. 

TAAG is expanding its schedule for the forthcoming winter season, including double-daily Boeing 777-300ER services to Lisbon (in addition to the 3X-weekly service to Oporto), as a result of new rights becoming available. Luanda-Cape Town flights will increase from 3X-weekly to daily at the end of October.

Alan Dron alandron@adepteditorial.com