Kenya Airways Plc said annual losses almost doubled even before the part-state owned national airline was forced to ground planes to help prevent the spread of the coronavirus.
Flight restrictions could have a greater impact on sub-Saharan Africa’s third-largest airline, which expects a fall in passenger traffic of as much as 65% this year, according Chief Executive Officer Allan Kilavuka. That would reduce revenue by $400 million from the 128.3 billion shillings ($1.2 billion) collected last year, Kilavuka said at an investor briefing on Wednesday.
The shares slumped 22% by close of trading in Nairobi, the biggest drop since November 2017.
The Nairobi-based company expects to resume commercial passenger flights next month after they were halted on March 25 to comply with government travel bans. Demand may not recover for a year, Chairman Michael Joseph said in an earlier statement.
Airlines worldwide have been battered by the Covid-19 outbreak, with governments pledging about $123 billion in support. The International Air Transport Association warned Tuesday there would be a “number of failures” if there’s no immediate improvement in trading conditions as countries come out of lockdown measures.
In Kenya, the airline asked the government for 9 billion shillings at the beginning of the year to support operations including maintenance of planes. It received 5 billion shillings with the rest expected after the new fiscal year begins in July, according to Joseph.
Kenya Airways made a seventh consecutive annual loss in 2019. The airline fell almost 13 billion shillings ($121.2 million) into the red, compared with 7.6 billion shillings the previous year, according to a statement.
The airline’s woes come as Kenya works toward a full nationalization of the national carrier. Under the plan, the government, which owns a 48.9% stake, is expected to buy out remaining investors and form a holding company to run the group alongside Kenya Airports Authority, the Business Daily newspaper said Wednesday, citing David Pkosing, chairman of the National Assembly’s transport committee.
Establishing a holding company that combines the airline and the airports operator “is definitely the way forward,” Joseph said in the Wednesday briefing. “Hopefully, depending on how the situation goes, we’ll see fruition in this coming year.”
“We are not going to invest in any new routes, going forward,” CEO Kilavuka said. “In some cases we will stop flying to those destinations, in other cases, we will reduce frequencies and in other cases we will suspend. In other cases we might decide to […]