Kenya Airways (KQ) has reported that it halved its net losses in 2021 to KSh15.87 billion and is set to receive a KSh20 billion bailout from the Kenyan Government.
The Nairobi-based carrier reported net losses of KSh15.87 billion ($138 million) for the year 2021, a 56.58% decrease when compared to a net loss of KSh36.2 billion ($314 million) in 2020.
After receiving approval from Kenyan Members of Parliament, the national carrier is set to receive a KSh20 billion ($173 million) bailout, according to reports from Business Daily.
The airline attributed its reduced annual net loss for 2021 to a 3.6% cut in its operating expenses, in addition to cost-containment measures and revenue diversification through its operations in the cargo business.
In a Kenya Airways group audit released on March 29, 2022, the airline’s Board Chairman, Michael Joseph revealed that restrictions arising from the Omicron variant hampered the airline’s growth.
“During 2021, KQ still felt the impact of the Covid-19 pandemic due to some restrictions and limitations due to the advent of the Omicron variant, particularly affecting our Dubai and Guangzhou routes but little impact in the European, US and regional routes,” commented Joseph.
In 2021, KQ recorded passenger numbers of 2.2 million, 25% above 2020 numbers and 57% below 2019 levels. The airline also recorded revenues of KSh70.2 billion ($610 million) in 2021, a 33% increase against KSh52.8 billion ($459 million) in 2020.
Joseph added: “Even with all these challenges, Kenya Airways has weathered the storm to post significantly improved results. An incredible amount of work by the Board and management has gone into these results. Management sought alternative revenue streams to replace lost revenue because of various travel restrictions. These revenue sources included air charter services, which increased by 300% and ancillary revenues which increased by 65%. In addition, management have reduced costs by 3.5% and reducing lease rentals for the aircraft by KSh10 billion ($86.9 million).”
“As we close out another year of operation through the global pandemic, we reflect on the journey that the airline has had this year,” said Allan Kilavuka, Group Managing Director & CEO, in a statement from the airline.
Kilavuka added: “The leadership is committed to strengthening our business and achieving profitability by embracing the ideals of sustainable business operations anchored around resilience, innovation, and diversification. We are making investments in innovation, technology and other efficiencies that will give our employees the support they need to take care of our customers. I remain grateful to Kenya Airways’ employees for their continued commitment to our customers as it has been crucial to our ability to weather the effects of COVID-19, and it will fuel our success as we move forward.”
In addition to the airline’s restructuring and the bailout approval, Joseph told Business Daily in a report release on March 31, 2022, that Kenya Airways would return to paying full salaries.
The first pay cuts were experienced in March 2020, following the onset of the coronavirus pandemic. Further pay cuts were implemented in January 2021 and were expected to last for six to 12 months.
In December 2021, the Kenyan government committed to providing KQ with financial support throughout FY2022 and FY2023 to aid in the carrier’s restructuring. The package was estimated to cost $1 billion dollars and cover outstanding debt, payment obligations and restructuring costs.
Kenya Airways resumed paying its employees their full salaries in December 2021, following discussions with the Kenyan Airlines Pilots Association.
However, after a delay in receiving its bailout package, the airline’s CEO Allan Kilavuka stated in a memo addressed to Kenya Airways employees that the airline would revert to reduced salaries in February 2022. This measure, he claimed, was to preserve cash and keep the airline afloat, promising that the outstanding workers’ pay would be settled once KQ received its bailout funds.
Kenya Airways over the years: pic.twitter.com/9XRoZVggeU— Mwango Capital (@MwangoCapital) March 30, 2022
Kenya Airways last turned a profit in 2012 and went on to post losses for most of the following decade.
However, a new partnership with South African Airways to bring forth a pan-African airline may yet help the Kenyan carrier to turn the corner.