Kenya Airways posts a net loss of Sh12.98 billion as nationalization looms

by Enock Bett · Published May 27, 2020 · Updated May 27, 2020

The National carrier, Kenya Airways has reported yet another annual net loss of Kenya Shillings 12.98 billion for the year ended December 2019, sinking further by shillings 5.442 billion compared to Shillings 7.558 billion losses posted in 2018 attributing the latest results to the International Financial Reporting Standard the company adopted last year.

In the year ended December 2019, the airline reported an 12.4 percent increase in operating cost which it justified to have been caused by the rise in capacity deployed and an increase in fleet ownership costs attributed to the return of two Boeing 787 aircraft that had been subleased to Oman Air. The airline’s total revenue however rose from Sh114.1 billion in 2018 to Sh128.3 billion in 2019 which the management Board Chairman, Mr. Michael Jospeh said was a result of improved passenger and cargo numbers due to expansion of network.

The year 2019 saw Kenya Airways invest in new routes; Geneva, Rome, and Malindi which boosted the airlines’ passenger numbers by 6.7 percent to hit a record of 5.1 million passengers. Passenger revenue grew by 8.9 percent while the capacity deployed in Available Seat Kilometres (ASKs) increased by 15 per cent, however, the cabin factor registered a minimal decline of 0.6 points to 77 per cent. Cargo tonnage increased by 6.3 percent from 64,238 tonnes to 68,264 tonnes.

The results come at the time the Parliament is set to discuss the nationalization of the airline set for next week when the house resumes. The Parliamentary transport committee had proposed the creation of a government-owned holding company under which the airline will be managed. The committee has come up with the National Aviation Management Bill 2o20 which seeks to guide on how the government which owns 48.9 percent of KQ, will buy out the remaining shares of 51.1 percent, before forming an Aviation Holding Company that will run the Kenya Airways PLC and the Kenya Airports Authority.

Kenya Airways is 48.9% owned by the government, 7.8% by France’s KLM, and 38.1% is owned by 11 lenders collectively. The committee has suggested a raft of tax exemptions and other measures that will boost the airline’s competitiveness.