KQ flies into record Sh36bn loss – the highest in Kenya’s corporate history

The enormous financial impact of Covid-19 pandemic has seen Kenya Airways loss soar to KSh36.6 billion from KSh13 billion for the same period in 2019.

The carrier, which is part owned by Air France KLM, said cargo volumes took a nose dive last year as the airline grounded some flights, leading to reduced space.

March 2020, was the worst year in aviation history, said Kenya Airways, adding that passenger traffic contracted to levels last seen in 1999. The air traffic was hit hard following the government directive to suspend all passenger services to check the global spread of coronavirus.

In the period under review, KQ revenue sank 59 per cent on account of Covid-19 disruptions to Ksh52.8 billion from Ksh128.3 billion in 2019 with only 1.8 million passengers transported in contrast to 5.2 million travelers a year earlier.

Read also: KCB sees profit slump 22 per cent as pandemic bad loan provision hit Sh28 billion

KQ, which recently received Sh10 billion shot in the arm from the government to cushion it against the effects of Covid-19 cut its operational costs by 39 per cent to KSh89.4 billion from KSh141.3 billion on the back of reduced operations. The slump has, however, been insignificant in offsetting dampened revenues.

The airline’s chief executive Allan Kilavuka said it will be difficult for the company to turn around its fortunes without the government support.

The situation continues to be difficult even as we gradually resume our operations, mainly due to the depressed demand for air travel, with recovery to 2019 levels expected to take between three to four years, the company said.

The loss-saddled carrier has pinned a potential turnaround to the clean-up of legacy issues including its cost base, contracts with third parties and re-capitalization through the on-going reorganization currently under consideration by Parliament.

Read also: Coop Bank profit dips 24 per cent to Sh10.8bn on loan defaults

Under the National Aviation Management Bill 2020, KQ is set to become a subsidiary in an aviation holding company the others being Jomo Kenyatta International Airport, a college for aviation and the Kenya Airports Authority. The move is modelled along the success story of Sub-Saharan Africa’s biggest airline Ethiopian Airlines.

Kenya Airways, which last made a profit in 2012 is the and the sixth-largest in Africa, with Nairobi serving as a critical travel hub for travelers between Europe, the USA and East and Southern Africa.

In 2017, the government turned Sh16.8 billion worth of loans it had advanced to the national carrier into shares as part of a debt restructuring plan. KQ is 48.9 per cent owned by the government and a group of 10 local banks that control 38.1 per cent of its shares.

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