File | Nation Media Group
What you need to know:
National carrier Kenya Airways (KQ) has continued its loss-making
streak and has moved deeper into the red in the six months to June
2020.
The airline has widened its half-year losses by 67 percent after it reported a Sh14.3 billion loss for the six months to June 30, 2020. This 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 financial pain and may need urgent intervention to
turn around its fortunes.
The Covid-19 pandemic also hit the airline at a bad time, when it was just finding its way back to reducing its losses.
Its revenues shrunk by nearly half from Sh58.5 billion to Sh30.2 billion in the six months period.
“The reduction is due to the cessation of scheduled operations from
the second quarter of 2020,” the airline said, adding that during the
period, the airline operated a few charter flights and continued with
cargo operations.
The silver lining was on cost cutting, which helped it cut its total operating costs from Sh61.4 billion last year to Sh38.6 billion. But given that its costs were far much ahead of its income, it 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.
If these two losses are factored in, its actual half-year loss grows two and a half times to Sh21 billion.
Its current liabilities stood at Sh59 billion, keeping its liquidity ratios in the red.
The airline’s chairman Michael Joseph said during the first half of 2020, its 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 lock downs effectively reducing operations to almost nil in connecting our home market to key cities,” Joseph 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 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 percent to Sh20 billion while capacity deployed in Available Seat Kilometres (ASKs) also declined by 53.5 percent.
The airline has widened its half-year losses by 67 percent after it reported a Sh14.3 billion loss for the six months to June 30, 2020. This compares to the Sh8.5 billion loss it made in a similar period last year.
The Covid-19 pandemic also hit the airline at a bad time, when it was just finding its way back to reducing its losses.
Its revenues shrunk by nearly half from Sh58.5 billion to Sh30.2 billion in the six months period.
The silver lining was on cost cutting, which helped it cut its total operating costs from Sh61.4 billion last year to Sh38.6 billion. But given that its costs were far much ahead of its income, it 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.
Sh21 billion comprehensive loss
And this is not all. The airline says there are other items that it plans to reclassify and pass them through its profit and loss statement, which will make its loss position worse. This includes a Sh3.2 billion loss on hedged exchange differences on borrowings and a Sh3.4 billion loss on lease liabilities.Its current liabilities stood at Sh59 billion, keeping its liquidity ratios in the red.
The airline’s chairman Michael Joseph said during the first half of 2020, its 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 lock downs effectively reducing operations to almost nil in connecting our home market to key cities,” Joseph 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 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 percent to Sh20 billion while capacity deployed in Available Seat Kilometres (ASKs) also declined by 53.5 percent.
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