Kenya Airways has decried continued loss-making streak and has moved deeper into the red.
The airline has heightened its half-year losses by 67 percent after it reportedly got a KE 14.3 billion loss for the six months to June 30, 2020. This unfavorably compares to the Sh8.5 billion loss it made in a similar period last year.
Most line items in its unaudited financial statements sent to the Nairobi Securities Exchange (NSE) on Friday paint a picture of an airline that is in a dire financial crisis and may need urgent intervention before falling on its knees
The Covid-19 pandemic being a major hit to the airline bid time when it was just trying to find its way back to reduce its losses. Its revenues dropped by nearly half from Sh58.5 billion to Sh30.2 billion in a six month period.
The reduction is characterized by the cessation of scheduled operations from the second quarter of 2020 as the airline reported, adding that during the period, the airline operated a few charter flights and continued with cargo operations.
Kenya’s airways were on a cost-cutting mission, which helped in reducing the total operating costs from Sh61.4 billion to KES 38.6 billion. However, the airline was disadvantaged because its costs were far much above the income. The company ended up with an operating loss of Sh8.4 billion. Adding other costs of Sh5.9 billion to this, the losses swelled to Sh14.3 billion.
Sources close to the airline management board indicate that there are other items that KQ plans to reclassify and pass them through the profit and loss statement. This includes KES h3.2 billion loss on hedged exchange differences on borrowings and KES 3.4 billion loss on lease liabilities, the two losses combined, its actual half-year loss grows two and a half times to Sh21 billion.
Its current liabilities stand at Sh59 billion, keeping its liquidity ratios in the danger marks.
Michael Joseph, the airline’s chairman reported in the first half of 2020, its operations were severely impacted by the Covid-19 pandemic resulting in distressing half-year results.
“The network activity from April to June was minimal due to travel restrictions and lockdowns e reducing operations to almost nil in connecting our home market to key cities,” the chairman said explaining that measures were put in place to preserve cash including cost savings measures and reduced activity for employees.
It recorded a 55.5 percent reduction in passenger numbers hitting a low of 1.1 million passengers during the period compared to 2.4 million passengers compared to the same period last year.