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Kenya Airways Projects KSh40Bn Lose in Revenue in 2020

Tanzania Allows Kenyan Airlines to Resume Operations 

Kenya Airways Planes parked in JKIA - PHOTO I https://twitter.com/peternjosh134

Kenya Airways (KQ) expects to lose a staggering KSh40 billion in revenues in 2020 from the 13 billion shillings last year according to chief executive Allan Kilavuka.

The projection comes as the coronavirus pandemic and ensuing lockdowns have crippled the tourism and hospitality sectors.

Speaking virtually to investors during the release of the airline’s 2019 financial results, Kilavuka said as of May, they had already lost Ksh 15 billion in revenue.

He noted that KQ’s passengers carrying capacity will decline to 65 percent post the pandemic.

“We will not operate at capacity since the numbers will drop by 65 percent,” said Kilavuka.

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The Nairobi Securities Exchange-listed carrier plans to resume operations in June but will be dependent on o the International Air Transport Association (IATA) directive and lifting of the travel restriction in Kenya.

“We shall start with domestic and regional flights, then include one or two international routes and increase as demand rises,” Kilavuka said. The airline halted commercial flights on March 25 to comply with government directive on travel bans.

Post-COVID -19, the chief executive says they will focus more on network rationalization, a diversification that will involve more into cargo business and digitization. 

“We are not going to invest in any new routes, going forward. In some cases we will stop flying to those destinations, in other cases, we will reduce frequencies and in other cases we will suspend. In other cases we might decide to increase,” said Kilavuka during the investor briefing.

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The Group saw a 12.4 percent increase in operating costs in the financial year 2019, driven by the increase in capacity deployed and an increase in fleet ownership costs attributed to the return of two Boeing 787 aircraft that had been subleased to Oman Air.

KQ Group Chairman Michael Joseph disclosed that they had applied for a two tranche Ksh.9 billion loan in January. They only received Ksh 5 billion and expects the second one from July.

“We’ve been grounded for almost three months now. During that time, we’ve maintained all of our 38 aircrafts. We have to pay leases and meet insurance costs which do not go away whether you fly or not. We have asked formally for support from government and are still waiting to hear from them,” he said.

Kenya’s National Treasury says it will expedite the nationalization of Kenya Airways. The government owns 48.9 percent of the national carrier and it is expected to buy out the remaining holders of 51.1 percent of the shares. 

Air France-KLM owns an almost 8 percent stake in Kenya Airways.

This will lead to the formation of an Aviation Holding Company to run the national carrier and Kenya Airports Authority (KAA).

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