Kenya Airways In Another Record Loss In 2015 Despite Cutting Jobs And Fleet
Kenya Airways, one of the leading airlines in Africa, posted another record loss in 2015 despite shedding employees, reducing the number of planes in fleet and selling land in a rationalization plan dubbed “Operation Pride”, the company announced on Thursday.
The African carrier, whose major shareholders are the Kenyan government and Air-France KLM, said it recorded a 26 billion shillings ($260 million) loss in the year ended March 2016 dragged lower by foreign exchange losses and lethargic fuel-hedging deals.
The third largest airline in Sub-Saharan Africa, After Ethiopian Airlines and South African Airways, has posted losses for four straight years and is in the middle of finding ways to turnaround its fortunes including selling its fleets, laying of employees and fund raising.
“We have had turbulent times and this loss is obviously significant. It is, however, important to know that we have made significant investments at a time when the industry generally was going through hard times,” Ventures Africa quoted Chief Executive Officer Mbuvi Ngunze saying.
While Kenya Airways sinks deeper into losses, it neighboring rival Ethiopian Airlines reported a $165.4 million profit for the financial year ended in 2015.
Kenya airways said that a 12.9 percent depreciation in the Kenyan shilling against the dollar, caused it to incur a $97 million foreign exchange loss in 2015.
According to Business Daily, the global volatility in fuel prices further forced the airline make a $51 million loss on fuel hedging due to the global fall in oil prices.
During the year, Kenya airways sold a prime landing zone at the prestigious Heathrow Airport in London, United Kingdom, and sold off two planes, which earned the airline $74 million.
In July 2016, the company started its retrenchment process which targets about 600 workers. This, it said, will reduce its staff costs.
Kenya Airways is currently valued at a negative $356 million and will find it hard to attract investors.
“In the current equity position, getting an investor would be very hard since it would be difficult to value the company”, Dennis Awori, the airline’s Chairman told Business Daily.
The Kenyan government injected the airlines about $100 million in loans to help the carrier mitigate effect o the record losses. The money was borrowed from Afreximbank of Egypt on behalf of the national carrier.
In June, Kenya’s Transport Minister James Macharia said five international airlines had expressed interest in buying a majority stake in the cash strapped African carrier.
Macharia said proposals from the five investors would be studied, but in the meantime the government would restructure the airline to turn around its fortunes before bids to buy it could be considered.