Nairobi. Troubled national carrier Kenya Airways’ half-year loss more than doubled to KSh8.56 billion, sinking shareholders into a deeper negative equity position of KSh16.18 billion.
The airline attributed the 112 percent widening of loss to increased operating costs in the wake of its expansion into new routes and the return of two Boeing 787 planes that had been sub-leased to Oman Air.
The company’s revenue jumped by 12.1 per cent to KSh58.5 billion in the period, from KSh52.1 billion in the first six months of last year.
Similarly, costs jumped 15.4 percent to KSh61.4 billion in the period from KSh53.2 billion last year, eating into the carrier’s margins.
“In turning around Kenya Airways, a deliberate decision was taken not to shrink the airline but instead improve financial performance through strategic investments on growth opportunities,” said board chairman Michael Joseph after announcing the results in Nairobi yesterday. “Some of these investments may deny KQ and its shareholders an immediate return but are expected to yield positive results in the future.”
The Treasury is Kenya Airways’ biggest shareholder, controlling a 48.9 percent stake while banks, which converted their loans into equity, own 38.1 per cent.
Strategic partner KLM is ranked third with 7.8 per cent shareholding while other investors hold 5.2 percent of the Nairobi Securities Exchange-listed company.
The carrier, known by its international code KQ, could be nationalised if the government adopts a recommendation made by Parliament.
The airline, which has been struggling to return to profitability and growth, now says it is banking on the nationalisation to turn around its fortunes. It believes that the benefits of scrapping of taxes after nationalisation will improve its financial position.
Nationalisation “Nationalisation is not what we want to be but it is what we need to be in order to be where we want to be,” said Mr Joseph. He blamed taxes slapped on the national airline for its dwindling performance.“Revenue will always be under pressure (under current landscape). All these (competing) airlines are State-owned and their costs are subsidised,” Mr Joseph said.Nationalisation is expected to help cut costs to enable KQ grow revenues and make a turn around.“We won’t have same costs under nationalisation. We will have a combined entity where we can integrate the airline,” he said. “(For instance) we will not be paying costs to Kenya Airports Authority (KAA), but to the holding company.”KQ intends seek tax exemptions under the law once the nationalisation process […]