Kenya Airways has announced a loss before tax of Ksh. 14.3 Billion for the 6 months ended June 2020 due travel restrictions occasioned by the Covid-19 pandemic. This represents a 68% rise from a similar period last year which stood at Ksh. 8.5 Billion.
The half-year loss is more than the annual losses that KQ has been posting for the last three years. The airline posted a net loss of Sh12.99 billion last year, up from Sh7.55 billion in 2018. The 2017 net loss was Sh10.21 billion from a record net loss of Sh26.2 billion in 2016.
During the period, the airline recorded a 55.5% reduction in passenger numbers at 1.1 million passengers compared to 2.4 million passengers over the same period last year, with passenger revenue declining by 53% to Kshs. 20.23 Billion as many passengers cancelled flights.
Operating costs on the other hand, declined by 37 percent to Sh38.6 billion mainly driven by the reduced operations for the year.
According to the airline, the short and medium-term projections indicate that the airline must inevitably reduce its operations before it begins to scale up again. As a result, KQ is currently undertaking an organisation-wide rightsizing exercise across its network, fleet as well as staff in order to reduce the company’s overall total fixed costs. The exercise is set to be completed by 30 th September 2020.
Allan Kilavuka, KQ Group Managing Director and Chief Executive Officer, had this to say, “It has been a tough year where we have faced unprecedented challenges. 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 scale of this challenge requires substantial change so we are in a competitive and resilient position to address the impact of COVID-19, withstand any longer-term reductions in customer demand and any economic shocks or events that could affect the airline.”
Michael Joseph, the KQ Board Chair, had this to say, “KQ’s focus is now on cash preservation to help navigate through the difficult period that has seen global airlines run into massive losses”. He also added that the airline has received for a moratorium on loans, deferred of lease rentals, payment plans with suppliers and also partially deferred staff salaries. The company has also exploited opportunities for raising much-needed revenue through cargo charters and passenger repatriation flights.