Kenya: KQ Forecasts U.S.$500 Million Revenue Loss By December

Kenya Airways could lose up to $500 million in revenues by the end of this year, due to disruptions associated with the coronavirus, which has grounded the airline's passenger operations.

So far, the airline's management says KQ has already lost an estimated $100 million due to the pandemic which forced the country to suspend international flights on March 25.

"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," the airline's Chief Executive Officer Allan Kilavuka said after an Annual General Meeting yesterday.

"When we estimate to the end of the year, we will lose between $400 million and $500 million"

Going concern

The suspension of passenger flights in March badly exposed the airline, which sources a bulk of its revenue from passenger services forcing it rely on cargo services which accounts for a paltry 10 per cent of its revenues.

"Our plea now is to be allowed to fly as soon as possible to mitigate these losses, because there is a limit to how much loss you can carry and continue to be a going concern," said Michael Joseph, the carrier's chairman.

Kenya's Ministry of Transport and aviation stakeholders have been developing new protocols to guide the safe resumption of local and international air transport services, which are now said to be ready.

KQ says it hopes to return to the skies in July, when the suspension of international flight into and out of Kenya is expected to be lifted, but the return to the skies will be "cautious and selective".

"It won't be the same routes or frequency or before, but we are yet to finally decide and publicise which those routes are. The thing is we have to be careful about how we start flying," Mr Joseph said.

The expected significant revenue losses from the grounding of the airline's main operations for more than three months are likely to bring more turbulence to the airline's already troubled operations.

Saviour Bill

Earlier this month, the financially struggling carrier reported a $130 million full-year loss extending a string of back-to-back losses that have forced the government to consider re-nationalising the airline to save it from collapse.

A Bill that will guide the plan to hand back the full ownership of KQ to the government was finally tabled before Parliament on Thursday, after a near three-month delay occasioned by the coronavirus pandemic.

"It is a complex process and not just nationalisation. It is also a question of how we deal with minority shareholders. All these still remain to be finalised," Mr Joseph said.

"We wanted to have to complete by August we will probably complete later than that," he added.

Re-nationalisation

The Kenyan government remains the largest shareholder in the airline controlling is 48.9 per cent stake, 38.1 per cent is owned by lenders who converted their debt to equity in 2017, while 7.8 per cent is held by Air France-KLM.

Under the re-nationalisation plan, Kenya Airways, Kenya Airports Authority and the Kenyatta International Airport will be become subsidiaries in an Aviation Holding Company in a plan the government says will help the country's aviation assets to complement each other.

"We want these aviation assets to talk with each other not to each other," the parliamentary Transport committee chair David Pkosing said one month ago.

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