After two years of crisis which could have marked its disappearance if it had not benefited from state support of approximately 6 billion dirhams (capital increase and guaranteed loan), the public company has faced, since the start of the armed conflict between Russia and Ukraine, to a veritable explosion in the price of a barrel, which rose from 60 dollars to 120 dollars.
A geopolitical mess that has a strong impact on the ‘fuel’ expenditure item
Having no visibility on the end of the geopolitical disorder which has caused RAM’s ‘fuel’ expenditure item to rise, a ministerial expert in charge of air transport said he was unable to predict “an agenda for a return to a cycle of profits, despite the strong recovery in global air traffic which will return to 90% of 2019 traffic by the end of the current year”.
Cautious, he made a point of specifying that if the current recovery were to continue, the rebound would certainly be beneficial for the accounts affected, but certainly not enough to return to a positive net result for the current financial year, which is calculated between the 1st November 2021 and October 30, 2022.
While excluding “also a priori” a positive net result for the future balance sheet of 2022-2023, our source argues that the current crisis, “of an economic nature”, could however be overcome quickly if the world price of kerosene were to return at manageable levels for the national carrier’s cost item.
No profits possible before a return to a consistent price per barrel
Despite the continuous upward trend, the expert believes that “if prices return to a consistent level, RAM will automatically resume the upward curve initiated at the start of President Addou’s term in 2018”.
A return to profits which, according to him, can only accelerate thanks to “a current and future demand so great that the RAM will be forced, as every summer before the crisis, to rent four aircraft to be able to satisfy it. “.
On the fact that RAM could rent at least ten planes, or even more, to satisfy the extraordinary level of summer demand expected in all the major tourist destinations on the planet, our interlocutor highlights the uselessness of such an initiative in the face of the current high price of a barrel of oil which prevents them from making profits.
An insufficient fleet to satisfy the strong summer demand?
It should be remembered that RAM had to sell six of the twenty planes grounded during the closure of international traffic, and that the volume of its fleet is no longer sufficient to take advantage of the commercial opportunities opened up by the explosion in world demand, especially on the eve of the summer season which should result in the massive return of customers from MREs and foreign tourists.
The national company, whose fleet is currently limited to 50 aircraft, has nevertheless been aiming since 2019 to eventually double it. The 50 additional units should be acquired on credit or on leasing.
A decade to double the air offer of RAM
On the doubling planned within the framework of the program contract which has dragged on since the arrival of Hamid Addou, our interlocutor recalled that “the ambition of the president had not been supported by the former minister Sajid; and that the Covid then prevented its successor from doing so when it was ready to validate the recommendations of the roadmap, including the purchase of 50 new planes”.
Knowing that the first orders, possibly launched at the end of 2022, can only be delivered within a minimum period of five years, it will take, according to our expert, at least a decade before obtaining the 50 units in question, i.e. by 2032.
The future of the order hanging on the volatile evolution of the price of oil
Despite our insistence, he said he was unable to assess the purchase price of the 50 Boeing medium and long-haul aircraft, but after consultation, the American manufacturer’s public price lists showed that the total bill should be around 3 billion dollars or the equivalent of 30 billion dirhams.
While waiting for better days with a more accessible barrel allowing such an order to be launched, the expert believes that RAM’s only current concern concerns the extreme volatility of the world price of oil, which has gone in less than a week from 120 to $105 then finally $115…
Being optimistic, he hopes that the recent conflict in Eastern Europe which financially impacted the global energy supply chain will soon be overcome so that all airlines on the planet can finally benefit from the resumption of air traffic. which promises to be just as historic as the coronavirus crisis which had completely devastated the aeronautical sector…