The national carrier Kenya Airways (KQ) has reported Ksh.36.2 billion loss in the year ended December 31, 2020, marking the highest loss in the corporate history of Kenya.
The loss increased from Ksh.13 billion that was reported a year earlier and it is largely attributed to the collapse of the airline's operations throughout 2020 following COVID-19 related disruptions.
KQ revenues in 2019 amounted to Ksh128.3 billion but dropped massively to Ksh.52.8 billion in 2020.
In the period following the grounding of flights between April and August last year, passenger revenues sunk by Ksh.69.9 billion.
While in 2019 the total number of passengers carried was 5.2 million but last year it dropped drastically to only 1.8 million individuals.
Ksh.864 million in handling services and a Ksh.5.1 billion wipe out in other revenues were other hits to the airline's revenues.
Even though KQ trimmed its overall costs by about 38.5 per cent to Ksh.89.4 billion from Ksh.141.3 billion in 2019, the cut was not significantly adequate to offset the dip in revenues.
Ksh.3.4 billion in employee cost savings from the reduction of salaries and company workforce restructures, Ksh.22.6 billion in savings from fuel and Ksh.27.4 billion in navigation and landing fees related costs were among the cost cuts.
Impairment costs in 2020 rose to Ksh.7 billion as
fleet costs surged by Ksh.3.3 billion.
Kenya Airways Chairman Michael Joseph stated,
“2020 was the worst year for aviation. We however did well and kept going once the grounding of flights ceased.”
Chief Executive Officer Allan Kilavuka added, “The difference between COVID-19 and other crises is that we were completely grounded.”
According the chairman, despite the gradual return to flights, there is bound to be 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,” Joseph stated.
Nevertheless, the KQ management is still optimistic of harnessing support from the government alongside its own intiative to derive new partnerships and clean up legacy issues such as costs and contracts.
Kilavuka pointed out, “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.”
The national airline is also 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.
KQ's operations are set to be merged to those of the Kenya Airports Authority (KAA) as its continuity is attached to the ongoing nationalization process
Michael Joseph said, “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.”
As of the end of 2020, KQ received Ksh.6 billion in support from the National Treasury. The money was appropriated through the first 2020-21 Supplementary Budget.
In order to survive the current crisis, the national airline is targeting tougher cash-control initiatives.
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