KQ reports Ksh.36.2B loss, the largest in Kenya’s corporate history


KQ reports Ksh.36.2B loss, the largest in Kenya's corporate history
Kenya Airways planes are seen parked during a pilots strike organised by Kenya Airline Pilots Association (KALPA) at the Jomo Kenyatta International airport near Kenya's capital Nairobi, April 28, 2016. REUTERS/Thomas Mukoya

In Summary

  • At Ksh.36.2 billion, this is the largest loss by a corporate in the country’s history.
  • The loss acceleration from Ksh.13 billion a year earlier is largely attributable to the collapse of its operations across 2020 on the back of COVID-19 related disruptions.
  • KQ revenues in the year for instance slumped by 59 per cent to just Ksh.52.8 billion from a higher Ksh128.3 billion in 2019.

Kenya Airways (KQ) has reported a near three times loss expansion to Ksh.36.2 billion in the year ended December 31, 2020.

This is the largest loss by a corporate in Kenya’s history.

The loss acceleration from Ksh.13 billion a year earlier is largely attributable to the collapse of its operations across 2020 on the back of COVID-19 related disruptions.

KQ revenues in the year for instance slumped by 59 per cent to just Ksh.52.8 billion from a higher Ksh128.3 billion in 2019.

This is as passenger revenues sunk by Ksh.69.9 billion in the period following the grounding of flights between April and August last year.

The total number of passenger carried in the period for instance fell to 1.8 million individuals in contrast to 5.2 million in the preceding year.

Other hits to revenues included Ksh.864 million in handling services and a Ksh.5.1 billion wipe out in other revenues.

Kenya Airways nevertheless trimmed its overall costs by about 38.5 per cent to Ksh.89.4 billion from Ksh.141.3 billion in 2019 but the cut was not significant enough to offset the dip in revenues.

The cost cuts included Ksh.22.6 billion in savings from fuel, Ksh.27.4 billion in navigation and landing fees related costs and Ksh.3.4 billion in employee cost savings from the reduction of salaries and company workforce restructures.

Fleet costs nevertheless surged by Ksh.3.3 billion lifting impairment costs in the period to Ksh.7 billion.

“2020 was the worst year for aviation. We however did well and kept going once the grounding of flights ceased,” stated Kenya Airways Chairman Michael Joseph.

“The difference between COVID-19 and other crises is that we were completely grounded,” added KQ Chief Executive Officer Allan Kilavuka.

Despite the gradual return to flights, Michael Joseph predicts a slow and painful recovery of KQ operations to pre-COVID-19 levels as the company sees a distant rebound in the year 2024.

“It is unfortunate that we do not see a recovery to pre-pandemic levels this year or in the next,” he stated.

The management of Kenya Airways nevertheless remains optimistic of rallying from the slack supported closely by government alongside its own intiative to derive new partnerships and clean up legacy issues such as costs and contracts.

“We would have liked to deliver a much better result today but we are taking the right steps on cash-conservation and de-risking. Without government support,it will be extremely difficult to survive. We are however doing our best to keep the airline going,” added Kilavuka.

KQ is further betting on leveraging new income streams such as cargo having recently re-purposed part of its Boeing 787 carrier to a full fledged freight carrier.

In the long-term, KQ’s continuity is pegged on the ongoing nationalization process from which its operations are set to be merged to those of the Kenya Airports Authority (KAA).

“Nationalization will give us strength and ability to compete on an equal playing field with peers especially Middle Eastern Carriers. All of our biggest competitors have the same structure,” said Michael Joseph.

KQ says it has meanwhile received Ksh.6 billion in support from the National Treasury as of the end of 2020 with the monies being appropriated through the first 2020-21 Supplementary Budget.

Moreover KQ says it has saved an estimated Ksh.6.6 billion in loan moratoriums by its debt holders.

The carrier is targeting tigher cash-controls to survive the current crisis.

 

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