Kenya Airways may lose US$0.65bn in 2020 due to the disruptions caused by COVID-19

KENYAKenya Airways (KQ), the national carrier, has announced that it may lose up to KSh70 billion (US$0.65bn) or more in 2020, compared to the KSh12.98 billion (US$0.12bn) losses it recorded in the 2019 financial year.

This is an upward revision from the KSh50 billion (US$0.46bn) it had projected as of June.

Kenya Airways Chief Executive Officer Allan Kilavuka said the forecast has been influenced by disruptions caused by COVID-19.

“We kept on revising the dates on when we expected to resume our flights operations and we are also witnessing some extra restrictions like flying to Europe and London that is affecting our revenue,” said Kilavuka.

Kilavuka was speaking during the release of the company’s half year results where it reported losses of up to KSh14.3 billion (US$0.13bn) in the first half of the year.

The company’s Chief Financial Officer Hellen Mwariri pegged the losses on reduced passenger traffic the airline has witnessed since the outbreak of the coronavirus disease.

“The company has continued to see a slow uptake in passenger traffic since many countries across the world shut its borders in order to curb the spread of the coronavirus pandemic,” said Mwariri.

Total revenues dropped by 48 percent to KSh30.2 billion (US$0.28bn) from KSh58.6 billion (US$0.54bn) impacted by the drop-in passenger numbers from 2.4 million in 2019 to 1.1 million in the first 6 months ending June 30.

The loss-making airline witnessed a 37 percent decline in costs to KSh38.6 billion (US$0.36bn) on reduced operations.

“We are working to see efficiency, lower fixed costs, maximizing on our digital platforms and also exploring our cargo platforms for recovery that might start in 2022 and where we see a full recovery in 2024,” Kilavuka added.

KQ is currently in talks with the government to receive support in order to remain afloat. The company also hopes to return to profitability by 2024.

“We are still in discussion with government on how much they can give us, we need a lot of money but we will not get all that we want because of the demand arising from the health sector,” board Chair Michael Joseph said, adding that he could not reveal how much money they had received so far.

The company has also exploited opportunities of raising much needed revenue through cargo charters and passenger repatriation flights.

Domestic and international flights returned in July and August respectively but KQ’s outlook for the remainder of the year remains depressed.

“Operations were severely impacted by the Covid-19 crisis resulting in depressed half year results,” said KQ chairman Michael Joseph. 

“The network activity from April to June was minimal due to travel restrictions and lockdowns effectively reducing operations to almost nil in connecting our home market to key cities.”

Mr. Joseph reckons that the airline is facing reduced demand in passenger business and increased costs due to tighter health and safety measures.

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