There seems to be no end to the woes bedeviling national carrier Kenya Airways after the company reported a Ksh14.3 billion loss for the half-year ended June 30, 2020, representing a 67% increase from the Ksh8.6 billion loss posted at a similar period last year.
In a statement, Board Chairperson Michael Joseph attributed the colossal loss to the COVID-19 pandemic that has crippled airlines world over as governments grounded international flights and restricted movement within their borders to limit the spread of the disease.
“During the first half of 2020, operations were severely impacted by the COVID-19 crisis resulting in depressed half-year results. The network activity from April to June was minimal due to travel restrictions and lockdowns effectively reducing operations to almost nil in connecting our home market to key cities. Measures were put in place to preserve cash including cost savings measures and reduced activity for employees,” said Mr. Joseph.
The group’s total revenue during the period reduced by 48% to Kshs. 30.2 billion due to the cessation of scheduled operations from the second quarter of 2020. During the period, the airline operated a few charter flights and continued with cargo operations.
In the same vein, the airline recorded a 55.5% reduction in passenger numbers to hit a low of 1.1 million passengers during the period compared to 2.4 million passengers over the same period last year.
Passenger revenue declined by 53% to Kshs. 20.2 billion. Capacity deployed in Available Seat Kilometres (ASKs) declined by 53.5%. The Cabin factor registered a decline of 6.7 points to 68%.
The group saw a decline of 37% in total operating costs, mainly driven by the reduced operations for the year.
Of the total operating costs, direct operating costs declined by 48.8% whereas fixed costs declined by 12.6%. The group recorded an Operating Loss Margin of 27.8% representing 22.9 points below the same period last year.
During the course of the year, the company’s main focus has been and will continue to be cash conservation even as the airline plans to sack half of its pilots to cut on costs.
“To this end, management undertook a number of initiatives. These initiatives included a moratorium on loans, deferment of lease rentals, payment plans with suppliers, and partial deferment of staff salaries. The company has also exploited opportunities of raising much-needed revenue through cargo charters and passenger repatriation flights,” Mr. Joseph said in a statement.
“Faced with long recovery prospects, diminishing revenue occasioned by reduced demand in passenger business and increased costs due to tighter health and safety measures, the business focus for the rest of 2020 will be ensuring the survival and rebound of the company,” further stated Mr. Joseph.
The airline projects the demand for air travel services to remain at less than 50% of 2019 for the rest of the year.