Kenya Airways seeks government loan, continues to struggle

Kenya Airways has followed the footsteps of a number of airlines around the globe, turning to their governments for financial aid. Such a move is becoming increasingly common, with airlines struggling to maintain profits thanks to the coronavirus outbreak.

Kenya Airways suspended all its international services on 22 March. Pictured is a Boeing 787 on approach to London Heathrow. Photo by Karam Sodhi │ AeroNewsX

Kenya Airways has been struggling for a while. In December 2019, the carrier issued a profit warning and said that it expected its 2019 financial year results to be approximately 25% less in earnings in comparison to 2018.

“Although Kenya Airways realized improved revenue growth in the year, profitability was constrained by the increased competition in the airline area of operations, which, in turn, has increased pressure on pricing in order to remain competitive,” the airline’s Chairman, Michael Joseph, said in a press release.

Kenya Airways says that it needs money to pay for maintenance of its grounded planes, payments for staff’s salaries and to pay off utility bills for security, water and electricity. The carrier has appealed to the government for help.

In an interview with Business Daily, Kenya Airways’ Chief Executive Officer, Allan Kilavuka said: “We have requested the government for financial support through a bailout as at the moment we are cash strapped by the fact that we are no longer in operation, except for a few local flights.”

Kenya Airways has been stripped of almost all its revenue sources, similar to other airlines around the world and is struggling to stay afloat.

A Kenya Airways Boeing 787. Photo by Ernest Leung │ AeroNewsX

Just a couple of weeks ago, Kenya Airways had received an SH5 billion loan from the government, a loan that, it seems, it will struggle to pay back thanks to the coronavirus’ impact on its revenue. The government, which is already the carrier’s largest shareholder, may look to nationalise the airline.

Increased competition, corruption and mismanagement are some of the major causes to the carrier’s losses over recent years.

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