KQ losses accumulate to Sh89.3bn in six years

Kenya Airways cumulative loses over the past six years now stands at Sh 89.3 billion following the release of its latest results.

On Tuesday, the airline announced yet another net loss Sh5.9 billion from Sh5.1 billion for the year ended December 2018 .  The loss before tax was Sh7.6 billion from Sh6.4 billion 2017.

This even after undertaking a massive debt restructuring plan in 2017 that was expected to bring the airline back to profitability.

The deal involved eleven local banks and the government converting close to Sh48 billion owed by the airline for shares.

This changed the shareholding structure at Kenya Airways with lenders acquiring a 38.1 percent stake managed under a special purpose vehicle called KQ Lenders Company.

The government, represented by the National Treasury which had advanced two loans to the  carrier worth Sh4.2 billion and $197.2 million (Sh19.7 billion) respectively, acquired an additional 19.1 per cent shareholding, pushing its total shareholding to 48.9 percent.

In 2013, the firm posted a total loss of sh10.8 billion before easing to Sh4.9 billion a year after. The following year, the airline posted a loss of Sh29.7 billion, the highest ever, before marginally dropping to Sh26.1 billion in 2016.

In 2017, KQ board hired a Polish CEO Sebastian Mikosz to take over from Mbuvi Ngunze who had headed the troubled airline for two years.

Mikosz who is hailed for turning around LOT Polish Airlines promised to steadily return KQ to profitability. The airline reported a drop in losses to Sh10.2 billion.

Mikosz on Tuesday attributed the Sh7.6 billion total loss to high fuel, personnel and the cost of aircraft. 

The loss making spree is however not affecting only Kenya Airways. Latest report by the International Air Transport Association (IATA) shows African airlines are expected to report a $300m (Sh300 billion) net loss in 2019, an improvement from $400 million (Sh400 billion).

According to IATA, the expected net loss per passenger will be $3.51 (Sh351), making Africa the weakest region, as it has been over the past four years.

"Performance is improving, but only slowly. Losses are expected to be cut in 2019 as fuel prices decrease. The region benefits from higher-than-average yields and lower operating costs in some categories," IATA said in a statement.

The loss is attributed to low passenger rate, closed air network and high operational costs, especially on aircraft acquisition and fuel.

It however added that few airlines in the region are able to achieve adequate load factors to generate profits.

For instance, Ethiopian Airlines has posted profits for the past two years, growing from $229 million (Sh22.9 billion) in 2016/17 to $233 million (Sh23.3 billion) in 2017/18.

While regional airlines are suffering economically, AITA forecasts the global airline industry net profit to be $35.5 billion (Sh3.5 trillion) in 2019, slightly ahead of the $32.3bn expected net profit in 2018.