Tough times as Kenya Airways posts Sh29.7 billion pre-tax loss

KQ Managing Director Mbuve Ngunze blamed the company's loss largely on drop in tourist numbers. (Photo:File/Standard)

National carrier Kenya Airways has reported a pre-tax loss of Sh29.7 billion, in full year results announced Thursday morning.

The results, for the financial year ending March 2015, show the company posted a Sh25.7 billion after-tax loss. This is the biggest loss to be posted by a Kenyan company.

The airline has received a beating from the slowdown in tourism industry that has seen it extend its pre-tax losses from the Sh4.8 billion loss it made in the previous year.

"There has been a reduction in tourism numbers. We are a significant carrier of tourists into the country," KQ Managing Director Mbuve Ngunze said at an investor briefing in Nairobi.

The results now give a glimpse of the troubles at the airline and explains why it had to ask the government for a sh4.2 billion loan to meet its running costs.

Shareholders and analysts raised concern over the airline’s ability to survive any longer after it posted a negative equity of Sh6 billion, which means the company is insolvent or technically bankrupt. The only thing that has saved it from closing down is a Sh20 billlion loan secured by Afriexim bank.

KQ, which has been in an aggressive aircraft purchase program that has seen its fleet rise from 43 to 52 including two freighters, says it plans to sell some aircrafts as well as a piece of land in Embakasi to raise additional capital.