Kenya Airways Records Sh12.9 Billion Loss

Kenya Airways (KQ) has posted a loss of Sh12.9 billion for the financial year ended in December 2019.

This represents a 71 percent growth in losses compared to the Sh7.6 billion loss recorded in the previous fiscal year.

KQ, through a statement on Tuesday said the company’s total revenue grew 12.4 percent to Sh128 billion last year down from Sh114 billion in 2018.

“The growth was due to improved passenger, cargo, ancillaries, and other revenue streams, mainly due to expansion of the Kenya Airways network,” KQ Chairman Michael Joseph said.

Last year, Kenya Airways launched new routes to Geneva (Switzerland), Rome (Italy), and Malindi, leading to a 6.7 percent rise in the number of passengers to 5.1 million travelers. Consequently, passenger revenue rose by 8.9 percent.

On the other hand, cargo tonnage increased from 64,238 tons to 68,264 tons, representing a 6.3 percent growth. Operating costs surged 12.4 percent to Sh129.1 billion from Sh114.8 billion.

“The Airline benefitted from the reduced global fuel prices and maintained low fuel costs through its hedging program,” the statement added.

KQ’s financial woes are expected to dip further due to the effects of the Covid-19 pandemic on the global economy. The airline grounded its entire fleet two months ago after the government banned international flights as part of the measures to contain the spread of the Covid-19 disease.

“The crisis has significantly affected economies around the world and the aviation sector in particular. We estimate that it will take at least a year to gain the confidence of the travelers and start recovering the travel demand,” Joseph added in the statement.

The National Treasury has turned down KQ’s request for an Sh7 billion bailout to enable it to pay workers, service the grounded planes, and pay utility bills. 

Treasury Cabinet Secretary Ukur Yatani said the government is focused on nationalization of the carrier to keep it afloat.

“We are not making any commitments at this stage. Kenya Airways need to remain afloat but it is also important to look at structural challenges because what is happening now is more than the business environment,” said Yatani.