Nairobi — National carrier Kenya Airways has sunk further into losses, posting a net loss of Sh12.98 billion for the year ended December 2019, compared to a Sh7.558 billion loss posted a year earlier.
The company has largely attributed the poor performance to the adoption of IFRS 16, a new lease accounting standard that was effected in January last year on a modified retrospective basis.
The Group also put the blame on the increase in operating costs - the costs rose by 12.4 percent, driven by the rise in capacity deployed as well as an increase in fleet ownership costs attributed to the return of two Boeing 787 aircraft that had been subleased to Oman Air.
During the period under review, the airline's total revenue however rose, increasing by 12.4 percent from Sh114.1 billion in 2018 to Sh128.3 billion in 2019.
The Airline's Board Chair Michael Joseph said growth was due to improved passenger, cargo, ancillaries, and other revenue streams, mainly due to expansion of the Kenya Airways network.
The year also saw the airline invest in new routes to the network; Geneva, Rome, and Malindi. According to Joseph, the expansion resulted in a 6.7 percent increase in passenger numbers to hit a record 5.1 million passengers.
Passenger revenue grew by 8.9 percent driven by route expansion (full year of New York operations, launch of Rome, Geneva and Malindi).
Capacity deployed in Available Seat Kilometres (ASKs) increased by 15 percent however, the Cabin factor registered a minimal decline of 0.6 points to 77 percent. Cargo tonnage increased by 6.3 percent from 64,238 tonnes to 68,264 tonnes.
The loss was largely expected, after KQ warned shareholders in December that it expected its net profit for the year ending December 2019 to decline by at least 25, on account of increased competition in the airline's area of operations.
The financial results come at a time when the coronavirus pandemic is hammering airlines around the world, and Kenya Airways has not been spared.
Towards the end of March, Kenya Airways suspended most of its operations, a measure that was taken to stop the spread of the virus.
With business yet to return to normalcy, Kenya Airways, like many other airlines, stands to make even bigger losses.
According to a report by IATA, airlines have parked between 80 and 90 percent of their aircraft, some 4.5 million flights have been cancelled and an estimated $314 billion in revenues will be lost this year.
"We've never seen anything like this," Alexandre de Juniac, head of the International Air Transport Association which represents some 290 airlines, told AFP earlier this month.
But Joseph remains hopeful that the debt-ridden airline will see some better days.
"We estimate that it will take at least a year to gain the confidence of the travelers and start recovering the travel demand. We however must look at the bright side of this crisis and the opportunity it presents us to recalibrate and reset our business in order to adopt measures that will future proof our Airline," the Chair said.