KQ recovery faces Covid-19 headwinds

Transport Cabinet Secretary James Macharia (left) and Kenya Airways Chairman Michael Joseph during the resumption of domestic flights on June 15. [Jonah Onyango, Standard]

The rising coronavirus infections have complicated the return of Kenya Airways (KQ) to the skies as it is now being forced to reduce capacity on some of its routes.

The carrier resumed international passenger flights on August 15 following reopening of the local airspace that had been closed in late March to contain the spread of Covid-19.

It started flying to select countries that offered adequate passengers to at least enable the carrier break even.

Another wave of infections has resulted in some markets putting in place restrictions that are now affecting the little business KQ has been doing. A number of countries have instituted some lockdown measures.

KQ Chairman Michael Joseph said the new developments would significantly impact earnings for the year.

“As a second wave is currently affecting many countries which have imposed new restrictions, this is further impacting the airline’s revenues as it cuts capacity deployed to various destinations,” he said in a statement yesterday. 

“The board and management are committed to work towards stabilising the airline amidst the ravaging effects of the pandemic.”

Since resumption of flights, the airline said, demand remained subdued and is expected to last for the next year.

KQ has already been through a cost-cutting exercise including laying off staff to ensure the numbers correspond with the reduced capacity. It has also been in negotiations with lenders and suppliers to relax payment terms.

“The board and management of KQ embarked on aggressive cost-cutting and cash conservation measures to minimise the impact on the airline,” Mr Joseph said.

“These measures included moratoria with financiers, lenders and lessors, renegotiations of contracts with suppliers and extended payment plans, and reduction in distribution costs among others.”

The airline is also in the process of rationalising its assets and human resources to match the reduced operations. The airline has so far closed seven loss-making stations, Joseph added.

Over the half year to June, when nearly all operations were grounded for about four out of six months, the carrier reported a net loss of Sh14.4 billion, compared to a loss of Sh8.5 billion over the same period in 2019.

KQ grounded most of its operations following the restrictions put in place by Kenya in late March that included closure of the local airspace. 

It was however able to operate repatriation charter flights as well as cargo flights, which included the distribution of medical equipment and transportation of fresh vegetables and flowers.