Aviation – KQ half-year net loss widens to Sh8 billion

Kenya Airways (KQ) has sunk deeper into the red, reporting a net loss of Sh8.5 billion in the first half of this year, up from Sh3.9 billion in the same period last year.

The troubled national carrier, which has now shifted its focus to a nationalisation exercise in the latest bid to get out of the red, attributed the loss on an increase in the cost of flying to new routes, new accounting standards and increased staff costs. This saw the carrier’s expenses surge to Sh67 billion. In the first half of last year, the national carrier’s expenses stood at Sh56 billion. Revenues, on the other hand, increased to Sh58 billion during the period under review from Sh56 billion last year.

KQ Chairman Micheal Joseph said at a press briefing in Nairobi whereas nationalisation is “not what the company wants”, it is “what it needs” to help it manage its costs. He said this was the strategy that KQ’s competitors in the region, including Ethiopian Airlines, had adopted to stay afloat. Mr Joseph explained that nationalisation would also be undertaken for strategic reasons to make Nairobi an aviation hub. He said the process would also help the airline get tax reliefs such as railway levy and excise taxes. Outgoing Chief Executive Sebastian Mikosz, however, noted that without the one-off costs that the airline undertook, KQ’s loss would have stood at Sh6.6 billion.

“These are investments we have taken seriously as a business for purposes of sweating the assets,” he said. The new accounting standards saw the airline bring the cost of leasing into the balance sheet, with their expenses increasing by Sh1.5 billion. “We had issues with delays and cancellations due to higher number of operations and not go-slows,” said Mr Mikosz. This even as insiders told The Standard that the airline’s pilots are planning another go-slow. Chairman Joseph meanwhile, said the board in the process replacing the outgoing CEO, with interviews lined up soon.

On the joint venture with KLM and Air France, the management said there plans to revise the deal so that Kenya Airways could have as much geographic reach in Europe as the two airlines have in Africa.

Source: www.standardmedia.co.ke