Kenya Airways sees recovery a year away as losses mount
INTERNATIONAL - 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.
The Nairobi-based company halted commercial passenger flights on March 25 to comply with a wave of travel bans and doesn’t see demand recovering for a year, Chairman Michael Joseph said in a statement late Tuesday. At the time, the airline asked for financial assistance from the government to see it through the next six months.
The shares slumped by almost a third as of 11:34 a.m. in Nairobi, the biggest drop since November 2017.
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.
Kenya Airways said it 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.
Air France-KLM owns an almost 8% stake in Kenya Airways.
The coronavirus pandemic presents Kenya Airways with an opportunity to “recalibrate and reset our business in order to adopt measures that will future-proof our airline,” Joseph said in the statement, without providing further detail.