Kenya Airways estimates to have lost an excess of $100 million (Ks 10 billion) in revenue from January to June and it projects year-over-year revenue to fall between $400 million – $500 million (Ksh 40-50 billion) due to fallout from the coronavirus pandemic.
Allan Kilavuka, KQ Chief Executive on Friday post the airline’s 44th Annual General Meeting said “We don’t have the full picture of how much we have lost, but our estimates are since January to date we have probably lost in terms of revenue in excess of $100 million. When we estimate till the end of the year we think we will lose probably between $400 and $500 million.”
“We don’t know how it will look like, because this is unprecedented, but this is what we are projecting.”
On the other hand, chairman Michael Joseph said their main plea is to ‘resume flights to mitigate these losses… as soon as possible.”
“Our job on the board is to be ready to resume flying as soon as we can to try and mitigate these losses, as there is a limit to how many losses you can carry,” he said.
Kenya Airways suspended most of its operation from 25th March 2020 with exception of cargo and chartered passenger repatriation.
“We estimate that it will take at least a year to gain the confidence of the travellers and start recovering the travel demand,” said Joseph.
Kilavuka said some of the measures taken to mitigate the losses, including a pause on route expansion.
“We will not be opening new routes, at least for the next two years, because we are not in a financial state to invest in a new route,” said Mr Kilavuka.
“That we will communicate in the near future, but we are not expanding in the foreseeable future.”
The airline is still seeking support from the government.
“We have asked the government for support, like every other airline in the world. Many airlines have gotten a bailout. The government has many other priorities; dealing with the virus is probably the most important one,” said KQ Board Chairman Michael Joseph.
Currently, it is relying on the cargo business to generate revenue by ferrying cargo to China, London, Sharjah, and Amsterdam.
“We have had consistent flights to china, specifically to carry Personal Protective Equipment (PPEs). We’ve also had repatriation flights to London, where we use the belly to carry cargo. We’ve started doing weekly flights to Sharjah in the UAE, ” Kilavuka added saying on average the airline transports approximately 3,000 tonnes of cargo a week, which fluctuates with demand.
The Board of Directors in its 2019 Annual report disclosed that there can be no assurance that the Group and Company will be successful with its strategic initiatives and balance sheet restructuring plans.
“Actual results could differ materially due to numerous factors including the material disruption of our strategic operating plan as a result of COVID-19, and our ability to execute our strategic operating plans in the long term; risks of doing business globally, including demand for travel and the impact that global economic and political conditions have on customer travel patterns; competitive pressures on pricing and on-demand; changes in aircraft fuel prices and disruptions in supply,” the Board noted.