Kenya Airways half-year loss widens 67pc to Sh14bn on Covid-19 woes

Kenya Airways #ticker:KQ net loss for the six months ended June 2020 has widened by 67.3 percent to Sh14.33 billion on account of Covid-19 disruptions that led to grounding of flights.

The national carrier said Friday morning that the passenger numbers dropped by 55.5 percent to 1.1 million in contrast with 2.4 million over the same period last year, hurting revenues.

“Operations were severely impacted by the Covid-19 crisis resulting in depressed half year results,” said KQ chairman Michael Joseph.  

“The network activity from April to June was minimal due to travel restrictions and lockdowns effectively reducing operations to almost nil in connecting our home market to key cities.”

The half-year loss is more than the annual losses that KQ has been posting for the last three years.

KQ posted a net loss of Sh12.99 billion last year, up from Sh7.55 billion in 2018. The 2017 net loss was Sh10.21 billion from a record net loss of Sh26.2 billion in 2016.

Mr Joseph has offered a bleak outlook on the remainder of the year despite domestic and international flights having resumed.

“The 2020 results will be significantly negatively impacted because of the projected suppressed air travel demand. We project the demand to remain at less than 50 percent of 2019 for the rest of the year,” said Mr Joseph.

During the review period, total revenue dipped by 48 percent to Sh30.21 billion in line with the fall in passenger numbers.

Kenya reported its first Covid-19 case on March 13, prompting the state to halt both domestic and international flights for the entire reporting period.

The halting of flights saw passenger revenue retreat by 53 percent to Sh20.23 billion as many passengers cancelled flights.

The government’s move restricted KQ’s revenue streams to the few charter flights it operated alongside the cargo operations.

KQ reacted to the Covid-19 hardships through layoffs and massive salary cuts to reduce the pressure on the bottom-line.

Operating costs declined by 37 percent to Sh38.6 billion mainly driven by the reduced operations for the year.

Mr Joseph says that KQ’s focus is now on cash preservation to help navigate through the difficult period that has seen global airlines run into massive losses.

He said KQ has received for moratorium on loans, deferred of lease rentals, payment plans with suppliers and also partially deferred staff salaries.

The company has also exploited opportunities of raising much needed revenue through cargo charters and passenger repatriation flights.

Domestic and international flights returned in July and August respectively but KQ’s outlook for the remainder of the year remains depressed.

Mr Joseph reckons that the airline is facing reduced demand in passenger business and increased costs due to tighter health and safety measures.