Kenya Airways Needs $500M Bailout After Revenue Falls By 50%

The Chief Executive Officer (CEO) of Kenya Airways, Allan Kilavuka, says the airline will need at least $500m to survive the novel coronavirus (COVID-19) crisis.

Kenya Airways half-year revenue fell by almost 50%, with the airline reporting an estimated $100m in lost revenue due to the coronavirus pandemic and related lockdowns

In June, Kilavuka estimated that by the end of the year Kenya Airways woukd lose probably between $400m and $500m.

The CEO said that the carrier, which is 49% state-owned, must also be fully nationalised alongside Kenya Airports Authority, which runs the Nairobi hub, under a holding structure similar to that of regional leader Ethiopian Airlines Group.

“If we don’t restructure the airline, and take the airline as is into this organisation, then we are doing a disservice to the taxpayer,” Kilavuka said.

“Right now it is undercapitalised, given the effects of Covid.”

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Kenya Airways is focused on cutting labour and plane-lease costs, its biggest fixed expenses, by $66m to the end of 2021.

Talks with unions are focused on eliminating costs without resorting to the 1,400 job cuts the company says may be needed.

Measures will need to deliver 40% savings to match continuing revenue declines, the CEO said.

In the interim, staff are drawing reduced pay and deferring the balance to a later date.

Meanwhile, Kenya Airways will resume flights to Tanzania on Monday, 21 September 2020.

The national carrier announced it would make its first flight to Tanzania’s commercial city of Dar es Salaam next week since it was suspended from flying to the neighbouring country.

Before the ban, Kenya Airways had planned two daily flights to Dar and three weekly flights to Zanzibar.

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Since the return of international flights on August 1, Kenya Airways, alongside three other Kenyan airlines – AirKenya Express, Fly540, and Safarilink Aviation – had been locked out of Tanzanian airspace after Nairobi retained Dar es Salaam on the red list of nations with a high risk of coronavirus denying its citizens unrestricted entry into Kenya.

KQ has since resumed flights to 30 destinations after grounding of fleets in March by the government to stem the spread of the virus.

The reopening of the Tanzanian airspace for Kenyan carriers comes just hours after the Kenya Civil Aviation Authority (KCAA) lifted the 14-day mandatory quarantine requirement for all passengers arriving from Tanzania.

On Tuesday, KCAA released a revised list that included Tanzania, among 17 other States and territories, whose citizens are now exempt from the two-week quarantine.

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Tanzania was the only East African country that had been exempted from the list, which led Tanzania Civil Aviation Authority (TCAA) to retaliate by closing its airspace for Kenyan carriers subject to review by Nairobi.

Kenya has now also eased the entry of nationals from Egypt, Ghana, Nigeria, Cameroon, The Gambia, and Sierra Leone.

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