Page 35 - World Airnews Magazine April 2020 Edition

AFRICA

KQ COUNTS THE COST

regards to the corona virus,” he said. NATIONALISATION
Meanwhile Kenya’s law makers have

enya Airways (KQ) has lost (US) $8 FALLING STOCK approved the nationalisation of KQ to

Kmillion in revenue in about one KQ’s stock on the NSE has fallen by 1.29 per save the airline that has been run down by

month since it suspended flights to China cent over the past month to trade as low as mismanagement and mounting debts.

as a precaution against the deadly corona Ksh2.29 ($0.022) per share. The government has adopted a plan to buy

virus outbreak. In the past seven years, the share price out KQ's minority shareholders and convert
The losses on the Nairobi-Guangzhou has dropped by over 75 per cent from a shares held by commercial banks into debt.
route include foregone passenger and high of Ksh9.40 ($0.094) in 2013. Under the plan, the government will also

cargo revenue. KQ, which is set to be delisted from the create a special purpose vehicle - Aviation

Acting chief executive Allan Kilavuka has Nairobi Securities Exchange after parlia- Holding Company (AHC) - to manage Ken-

said that China is a key cargo origin as well ment approved its takeover by the state, ya’s aviation sector.
as a main feeder to the regional freighters, widened its losses for the year 2018 to The AHC will have four subsidiaries -
and the suspension of flights since the Ksh7.5 billion ($75 million) from Ksh6.4 Kenya Airways, Kenya Airports Authority,

end of January has dealt a big blow to the billion ($64 million) in 2017. Jomo Kenyatta International Airport and a

airline’s revenues. Its net loss for the six months’ period to June centralised Aviation Services College, which
“We are looking at lost revenue of about 30, 2019 more than doubled to Ksh8.5 billion will be run independently.
(US) $8 million, both passenger and cargo. ($85 million) from Ksh4 billion ($40 million) in KQ is 48.9 per cent owned by the govern-

However, various initiatives are in place to in- the same period the previous year (2018). ment, and a group of 11 local banks which

crease passenger and cargo revenues on other Globally, the International Air Transport own 38.1 per cent of the shares.

routes to minimise this impact,” said Kilavuka. Association (IATA) forecast the aviation Other shareholders include KLM Royal Dutch
The corona virus has so far infected more than industry will lose (US) $29 billion worth of Airline (7.8 per cent), employees (2.4 per cent)
75,000 people globally and killed over 2,200*. passenger revenues this year, of which (US) and other shareholders at 2.8 per cent.

(*figures accurate at the time of going to $40 million will be from African airlines. The airline is facing threats from competi-
press) According to IATA, carriers outside the tors such as Ethiopian Airlines, Rwandair,

He said that KQ switched the aircraft that Asia-Pacific are forecast to lose (US) $1.5 Emirates, Qatar and Etihad, all which are

operated the route to China, to Dubai, from billion, assuming the loss of demand is fully state-owned and subsidised, and have

February 11, and changed the timing of the limited to markets linked to China. engaged in aggressive growth strategies

Bangkok flight from a midnight departure Global traffic is forecast to drop, causing focused on volume and market share.

to early morning as a way of maintaining the first overall decline in demand since the KQ’s former chief executive Sebastian Miko-

operational efficiency and minimising dis- Global Financial crisis of 2008-2009. sz quit in mid-December after he declined to

ruption to passengers. “This will be a very tough year for extend his three-year contract, which expired

“Due to our additional precautionary airlines,” said Alexandre de Juniac, IATA’s on December 31, citing personal reasons.

measures we have faced some delays in director general and chief executive. In July last year, chief operating officer

operations. We are working closely with “It is clear the airlines are struggling. Our Jan De Vegt resigned after serving for three

the port health teams from the Ministry initial analysis suggests that we are facing years, and chief financial officer Hellen
of Health as guided by the World Health a 4.7 per cent hit on global demand. That Mathuka was suspended in September. Q

Organisation who continue to monitor could more than eliminate the 4.1 per cent Article courtesy https://www.thecitizen.

and advice on the next steps to take with growth we forecast for 2020 in December.” co.tz/
World Airnews | April 2020
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