Kenya Airways has reported a record Sh25.7 billion loss after tax attributable to competition from Middle East carriers and high operating costs.
The airline also blamed travel advisories that led to a slump in the tourism industry, as well as runway closures for renovation, for eating into the company’s 2014/2015 full-year earnings.
The airline has received a beating from the slowdown in tourism industry that has seen it extend its pre-tax losses from the Sh4.8 billion loss it made in the previous year. “There has been a reduction in tourism numbers. We are a significant carrier of tourists into the country,” KQ Managing Director Mbuve Ngunze said at an investor briefing in Nairobi.
The flag carrier has secured a Sh20 billion loan to avoid sinking into complete bankruptcy.
Shareholders and analysts raised concern over the airline’s ability to survive any longer after it posted a negative equity of Sh6 billion, which means the company is insolvent or technically bankrupt. The only thing that has saved it from closing down is a Sh20 billlion loan secured by Afriexim bank. KQ, which has been in an aggressive aircraft purchase program that has seen its fleet rise from 43 to 52 including two freighters, says it plans to sell some aircrafts to raise additional capital.
