KQ's huge losses are despite the airline’s cargo business posting growth. [Elvis Ogina, Standard]

National carrier Kenya Airways (KQ) has reported a net loss of Sh11.49 billion over the last six months to June 2021.

This is however an improvement from Sh14.33 billion that the airline reported over a similar half in 2020. The airline attributed the reduced losses to cost reduction over the half-year as well as lower consumption of fuel owing to fewer flights and a drop in fleet ownership costs following negotiations with aircraft owners leasing planes to KQ.

The huge losses are despite the airline’s cargo business posting growth. KQ’s revenue, however, declined to Sh27.35 billion over the period, compared to Sh30.21 billion in the half to June 2020, severely impacted by Covid-19.

Revenues for the two half years are in comparison to Sh58 billion the carrier made over a similar half in 2019. The operating costs reduced to Sh34.63 billion from Sh38.63 billion in the same period last year.

“During the period, the company’s main focus was, and still is cash conservation,” said KQ Chairman Michael Joseph KQ at a virtual investor briefing yesterday.

“The company has exploited opportunities of raising much-needed revenue through passenger charters and ramped up cargo operations. Other initiatives undertaken by management include partnerships with other airlines, lease rentals re-negotiations, payment plans with suppliers and partial deferment of staff salaries.”

KQ Chief Executive Allan Kilavuka said travel to Africa, where the carrier had a strong footing before the pandemic, has remained subdued owing to restrictions put in place to contain the spread of Covid-19.

The slow rollout of vaccines has also kept travellers at bay. Kenya has vaccinated about two per cent of the population, which mirrors the vaccination rate in many African countries.

It is in comparison to over 60 per cent in the United Kingdom and well over 50 per cent in the US. “People coming into this region are hesitant especially because of the low vaccine rollout. This is going to impact us now and also into the future. These constraints and resections are a major challenge for us,” he said.

The carrier was also affected by the UK putting Kenya on its red list and restricting people’s movement between the two countries, with traffic for KQ on the route going down 87 per cent over the half. It also has to grapple with limited frequencies in China, a route that has in recent years become a key revenue earner for the carrier.

The airline used to operate daily flights to the Asian country but currently runs two weekly flights, resulting in an 86 per cent drop in the number of passengers. India, another major destination suspended flights into the country since May and over the half-year, KQ reported an 86 per cent drop in passenger numbers.

It is the case with the European Union that has restricted entry for African carriers due to low vaccination levels. This saw KQ report a 94 per cent drop in passengers ferried to the EU.

Kilavuka said cargo revenues went up by 60 per cent due to a strong focus on freighter operations. It is angling for more growth in the short term, including transporting of Covid-19 vaccines to different countries in Africa.

“Cargo has been contributing about 10 per cent to our revenues but want to want to increase this to over 20 per cent in the coming years. Repurposing of two Dreamliners has helped increase the cargo that we can ferry to 500 tonnes per month,” said Kilavuka.

“Our cargo volume has significantly grown, 33 per cent compared to last year.” While there has been growth in the cargo business, Kilavuka noted that the airline carries cargo in the bellies of passenger aircraft but cannot carry huge cargo due to the restrictions that have limited frequencies for passenger planes.

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