Kenya Airways (KQ) net loss has nearly tripled to Sh36.2 billion ($329 million), the worst ever in the history of the airline, on account of Covid-19 disruptions that led to a sharp decline in passenger numbers.
The loss, for the financial year ended December 2020, is 2.8 times more than the Sh12.98 billion ($118 million) net loss it had posted a year earlier, and now deals a major blow to the recovery efforts of the national carrier.
KQ chairman Michael Joseph says the outlook still looks bleak and the airline will be seeking a right-sized network to match the prevailing demand.
“The Covid-19 global outbreak in 2020 was beyond anyone’s prediction and its impact on the industry is expected to continue affecting air travel demand for the next two to three years,” said Mr Joseph.
KQ’s loss, also the worst ever results in corporate Kenya, came on the back of strict Covid-19 control measures across the globe that crushed demand for air travel.
The airline says that passenger revenue dropped by 67.5 per cent to Sh33.7 billion ($306 million) as passenger numbers reduced by 65.7 per cent to 1.8 million.
“Approximately 70 per cent of the total passengers carried in 2020 were flown during the first three months of the year, demonstrating the drop in demand as the global crisis deepened during the year,” said Mr Joseph.
Total income dipped by 58.9 percent to Sh52.8 billion ($480 million) underlining the impact of a sharp fall in passenger numbers as countries restricted movement to contain the spread of Covid-19.
The latest loss means that KQ has now gone for the eighth straight year without profits, extending its accumulated losses to Sh128.76 billion ($1.1 billion).
The airline last made a profit in 2012 when it closed with net earnings at Sh1.66 billion ($15 million).
The huge accumulated losses have seen KQ’s negative equity position worsen from Sh17.89 billion a year earlier to Sh64.2 billion, meaning that it is technically insolvent.
Kenya reported its first Covid-19 case mid-March last year, prompting the state to ground both domestic and international flights for months.
KQ reacted to the Covid-19 hardships through layoffs and massive salary cuts to reduce the pressure on the bottom-line.
However, the muted demand in passenger business and increased costs due to tighter health and safety measures kept recovery out of reach for the airline.