Kenya Airways CEO Allan Kilavuka during a January 18 briefing in Nairobi. PHOTO | DENNIS ONSONGO | NMG Kenya Airways (KQ) is eyeing a fresh bailout from the government to steady its operations despite narrowing its half-year loss by a fifth.
KQ chief executive Allan Kilavuka said Thursday the national carrier was in a precarious financial position and that the recovery of revenues to pre-coronavirus levels looks set to delay up to 2024, especially given that Africa lags in the vaccination against the disease.
The airline posted a Sh11.49 billion net loss in the six months ended June— a 19.8 percent cut from the Sh14.33 billion loss it incurred in the preceding similar period, taking its accumulated losses over the years to above Sh127 billion.
KQ says the long recovery prospects and diminishing revenue in an environment of increased costs due to tight health and safety measures mean it will require a bailout to stay afloat.“The financial situation of the company is precarious.
We are in a negative equity position, which means we are insolvent as an organisation, obviously made worse by the pandemic,” Mr Kilavuka said.
“Definitely the company needs financial support and this is not a secret. We still need financial support from our principals or elsewhere.”
He did not specify the amount and the nature of support for an airline that last year tapped Sh11 billion loan from the government to fund its operations at a time the Covid-19 pandemic had grounded its operations.
KQ’s planned request for a fresh bailout comes at a time many State-owned entities, including Kenya Power and Kenya Railways, have continued to depend on the exchequer for survival, with little being done to fix their business models.
Kenya has about 260 State corporations and the Treasury estimates that taxpayers may spend about Sh382 billion in keeping afloat the operations of 18 of them in the next five years.
The International Monetary Fund has pushed Kenya to clear inefficiency in these institutions, including cutting duplicate roles and trimming the headcount.
KQ in May picked a UK consultancy firm, Steer Group, to craft a viable turnaround strategy options in the face of deepening financial losses and depressed passenger numbers.The airline’s key routes, including London, India, and Guangzhou, have experienced travel restrictions, leading to depressed demand.With about two percent of Africa’s adults vaccinated compared to 51 percent in the US and 61.6 percent in the UK, recovery looks set to delay since Africa is […]