Kenya Airways (KQ) plans to resume passenger flights as soon as the government lifts a travel ban that had been imposed on international flights on March 22, ending months of lost revenue due to the COVID-19 pandemic.
The ban effectively cut off Kenya Airways’ flow of new revenues at a time it had no cash revenues.
It is expected that air travel will be fully operational by the third quarter of the year.
The airline sees the move as the best-case scenario but warns that the ultimate length of suspension of the flight business is still uncertain.
According to KQ in its latest report, “There is reasonable expectation that the flights could resume in the third quarter of the year with business expected to have started at very low capacity and a gradual ramp-up, influenced by the gradual lifting of travel bans, uncertain passenger confidence and health safety measures.”
Discussions with key industry stakeholders are going on in relation to a safe return to passenger routes, the airline says.
It is expected that KQ will be able to cover its variable costs on resumption.
“The resumption is expected to happen within the period of the moratoriums already being negotiated with lenders and lessors and thereby allowing the airline to grow back its revenue base and gradually cover its fixed costs,” says the airline.
The airline has been operating only cargo flights for essentials services such as medicine but it has not been enough to sustain business given that it was already a loss territory before the coronavirus pandemic.
KQ’s Chief Executive Officer Allan Kilavuka had unsuccessfully applied for a bailout from the National Treasury to help meet maintenance costs of grounded planes, salaries and settle utility bills like security, electricity and water.
President Uhuru Kenyatta on Saturday took a cautious approach to the pandemic, warning that relaxing measures such as curfews and containment of certain counties by just 20 percent would lead to 200,000 infections and 30,000 deaths by December.

Source; https://africa.cgtn.com/2020/06/15/kenya-airways-plans-to-resume-passenger-flights/

Authorities in the UAE last month said that people whose residency visas expired during the Covid-19 outbreak would be extended until the end of the year.

The decision was made to help residents and companies amid strict stay-home measures that were put in place to prevent the spread of the coronavirus.

But as residents begin to leave the country on repatriation flights or others remain abroad, unable to return because flights have been grounded and borders closed, questions about visas and sponsorships remain.

People have been keen for more information about their residency status after authorities gave March 1, 2020 as a cut-off date for the visa changes.

Many residents, whose visas were cancelled, worry about overstay fines after they lost jobs because their companies cut back on staff due to the economic effect of the pandemic.

The National spoke to Haider Hussain, partner at Fragomen, an immigration services firm, to explain the current rules.

He said authorities have been proactive as they attempt to provide clarity where possible in a constantly evolving scenario due to the virus.

What happens if my visa expired between March and December?

Anyone whose residency visa expired between March and December will have it extended until December 31 automatically. This applies whether your residency visa expired in April or will expire in June or later. In UAE immigration records, the visa will be extended to December 2020.

What about people whose visa expired or was cancelled before March 1?

These residents can stay in the country for three months, beginning May 18, 2020, without incurring fines. This means they can remain until August 18 without paying visa overstay fines. If they find a new job and are sponsored by their employer, they will be issued a residency visa.

What happens to residents who have lost their jobs and their employers have cancelled their visa after March 1?

People whose visas were cancelled after March 1 have a 30-day grace period from the date of cancellation. They need to secure a new job to change their sponsorship or leave the UAE within a month or risk incurring fines. The overstay fines are Dh225 on the first day and Dh25 for each subsequent day.

One option is to file for a tourist visa. Although tourist visas remain suspended for people outside the UAE, people within the country can apply for a tourist visa to get immediate relief. This will give them an additional 90 days without being fined.

The in-country visit visa fee including immigration status change will cost about $435 (Dh1,598) for a 30-day short stay and about $530 (Dh1,946) for 90 days.

They can also apply for a seat on a repatriation flights that various countries are organising.

Employers are encouraged to be accommodating and companies are requested to show compassion by delaying or holding visa cancellations until restrictions on travel lift.

Authorities have also been lenient in some cases when companies or individuals request a waiver or reduction on fines. Companies and individuals are assessed on a case-by-case basis. In some instances, employers have covered fines to alleviate pressure on employees.

What happens to the visas for dependent family members or domestic workers?

The same rules apply to dependents.

Residency visas for dependents that expire between March 1 and December 31 will be renewed automatically until the year-end and this includes housemaids and domestic workers.

In case of cancellation, the dependents’ visa must be cancelled first and only then can an employee’s residence permit be cancelled. Dependents too have an option of securing a tourist visa or if the family breadwinner secures fresh employment and gets a new visa, the dependents also then can be sponsored.

Can dependent visas be put on hold and not cancelled?

If the person sponsoring others is changing jobs, they can put their dependents’ visas on hold rather than cancelling them. This freezes their status in the system and they cannot exit the country during that time. The sponsoring resident can then cancel their visa, get a new one and then remove the hold on the dependent’s visa. This is for dependents not sponsored by a company but sponsored by a spouse or resident.

The ‘hold’ process was suspended during the stay home restrictions since original documents needed to be submitted but the facility is available now since Amer centres have reopened.

Do you still need to get a medical test?

Regardless of category, for renewal or extension of visas, residents, domestic workers, employees do not require medical tests. It may be required if there is a new entrant into the country, an application would then need to be submitted.

What services are available online and when do you need to go to the Amer centre?

People can check the status of their residency on the Federal Authority for Identity and Citizenship website.

Processing for visas varies between emirates and several services are available online. You may need to visit an Amer centre if original documents must be submitted over the counter.

Several employers and companies have continued to apply online for new visas and for renewals of residence permits due to expire.

Instead of the residence permit being stamped on passports, people have received an electronic residence permit or an e-permit that is emailed.

At present, there is no clear indication of whether these electronic renewals must be re-endorsed on the passport with a visit to the Amer centre.

With offices moving to 100 per cent staffing this month, there will be a better understanding about whether all extension of visas will be via an e-sticker or if passport must be submitted for re-endorsement of residency permits.

Clarity on this will be important since it could have an impact on people who travel in and out of the UAE as flight services resume.

What happens if my visa is cancelled but I cannot leave the UAE because there are no flights available to my country?

The UAE authorities have been accommodating and supportive where possible depending on each case. Residents should also get in touch with embassies about any processes in place.

How do I check if my visa is valid?

Visit this website: https://smartservices.ica.gov.ae/echannels/web/client/default.html#/fileValidity

Alternatively, visit this website if you are a Dubai residence permit holder:

https://smart.gdrfad.gov.ae/Public_Th/StatusInquiry_New.aspx

 

Source: https://www.thenational.ae/uae/government/coronavirus-uae-residency-visa-processes-amid-covid-19-explained-1.1029130

The International Air Transport Association (IATA) introduced a free online interactive world map to provide travellers with the latest COVID-19 entry regulations by country. The map relies on IATA’s Timatic database which contains comprehensive information on documentation required for international travel. To keep pace with the dynamic situation with respect to COVID-19, Timatic is updated more than 200 times per day to provide accurate travel restrictions specific to the current pandemic, based on one’s citizenship and country of residence.

‘’As the aviation industry prepares to safely restart, travellers will need to know which countries’ borders are open and what health restrictions exist. Travelers can rely on Timatic for comprehensive and accurate information on travel during the pandemic,’’ said Anish Chand, IATA’s Assistant Director, Timatic.

In a recent survey commissioned by IATA regarding concerns people had about air travel post-crisis, more than 80% of travellers said they are as concerned about potential quarantine restrictions as they are about actually catching the virus during travel.  With the uncertainties and quickly changing health restrictions from one country to the next during the pandemic, this new resource for travel planning is timely and important.

‘’We support the International Civil Aviation Organization (ICAO) guidelines to harmonize the measures to keep people safe while traveling and provide the confidence to open borders without quarantine measures. And this Timatic offering will be a vital tool for travellers who need easy access to accurate information on entry requirements,” said Chand.

 

The International Air Transport Association (IATA) released its financial outlook for the global air transport industry showing that airlines are expected to lose $84.3 billion in 2020 for a net profit margin of -20.1%. Revenues will fall 50% to $419 billion from $838 billion in 2019. In 2021, losses are expected to be cut to $15.8 billion as revenues rise to $598 billion.

“Financially, 2020 will go down as the worst year in the history of aviation. On average, every day of this year will add $230 million to industry losses. In total that’s a loss of $84.3 billion. It means that—based on an estimate of 2.2 billion passengers this year—airlines will lose $37.54 per passenger. That’s why government financial relief was and remains crucial as airlines burn through cash,” said Alexandre de Juniac, IATA’s Director General and CEO.

“Provided there is not a second and more damaging wave of COVID-19, the worst of the collapse in traffic is likely behind us. A key to the recovery is universal implementation of the re-start measures agreed through the International Civil Aviation Organization (ICAO) to keep passengers and crew safe. And, with the help of effective contact tracing, these measures should give governments the confidence to open borders without quarantine measures. That’s an important part of the economic recovery because about 10% of the world’s GDP is from tourism and much of that depends on air travel. Getting people safely flying again will be a powerful economic boost,” said de Juniac.

2020 Main Forecast Drivers:

Passenger demand evaporated as international borders closed and countries locked down to prevent the spread of the virus. This is the biggest driver of industry losses. At the low point in April, global air travel was roughly 95% below 2019 levels. There are indications that traffic is slowly improving. Nonetheless, traffic levels (in Revenue Passenger Kilometre) for 2020 are expected to fall by 54.7% compared to 2019. Passenger numbers will roughly halve to 2.25 billion, approximately equal to 2006 levels. Capacity, however, cannot be adjusted quickly enough with a 40.4% decline expected for the year.

Passenger revenues are expected to fall to $241 billion (down from $612 billion in 2019). This is greater than the fall in demand, reflecting an expected 18% fall in passenger yields as airlines try to encourage people to fly again through price stimulation. Load factors are expected to average 62.7% for 2020, some 20 percentage points below the record high of 82.5% achieved in 2019.

Costs are not falling as fast as demand. Total expenses of $517 billion are 34.9% below 2019 levels but revenues will see a 50% drop. Non-fuel unit costs will rise sharply by 14.1%, as fixed costs are spread over fewer passengers. Lower utilization of aircraft and seats as a result of restrictions will also add to rising costs.  

Fuel prices offer some relief. In 2019 jet fuel averaged $77/barrel whereas the forecast average for 2020 is $36.8. Fuel is expected to account for 15% of overall costs (compared to 23.7% in 2019).

Cargo is the one bright spot. Compared to 2019, overall freight tonnes carried are expected to drop by 10.3 million tonnes to 51 million tonnes. However, a severe shortage in cargo capacity due to the unavailability of belly cargo on (grounded) passenger aircraft is expected to push rates up by some 30% for the year. Cargo revenues will reach a near-record $110.8 billion in 2020 (up from $102.4 billion in 2019). As a portion of industry revenues, cargo will contribute approximately 26%–up from 12% in 2019.

2020 Regional Performance

All regions will post losses in 2020. The crisis has taken on a similar dimension in all parts of the world with capacity cuts lagging about 10-15 percentage points or more behind the over-50% fall in demand.

 

REGION	PASSENGER DEMAND (RPKS)	PASSENGER CAPACITY (ASKS)		NET PROFIT		REMARKS
Global	-54.7%		-40.4%		-$84.3b
North America	-52.6%		​-35.2%		-$23.1b	North America’s large domestic markets and financial support to US carriers under the CARES Act are expected to play a key role in the recovery.
Europe	-56.4%		​-42.9%		-$21.5b	The progressive opening of intra-European travel has the potential to boost the recovery, provided onerous quarantine measures are avoided. Strings attached to government relief packages, particularly for environmental purposes, will need to be carefully managed to avoid unintended consequences such as damaged competitiveness.
Asia Pacific	-53.8%		​-39.2%		-$29.0b	Asia-Pacific was the first region to feel the brunt of the COVID-19 crisis. It is expected to post the largest absolute losses in 2020.
Middle East	-56.1%		​-46.1%		-$4.8b	Lower oil prices will add extra pressure to a difficult economic situation within the region. The recovery for the region’s super connectors could be delayed with the expected phasing of the re-start with domestic and regional followed by long-haul international routes.
Latin America	​​-57.4%		​-43.3%		-$4.0b	Latin America entered the crisis with a delay. The region’s governments have implemented some of the most draconian measures in terms of border closures which could both delay and slow down the recovery.
Africa	-58.5%		​-50.4%		-$2.0b	The course of the virus in this region is yet to be fully seen. Nonetheless, border closures have all but stopped flights. International donors will be needed to supplement the limited means for the region’s governments to provide relief packages.

Reduced Losses in 2021

With open borders and rising demand in 2021, the industry is expected to cut its losses to $15.8 billion for a net profit margin of -2.6%. Airlines will be in recovery mode but still well below pre-crisis levels (2019) on many performance measures:

• Total passenger numbers are expected to rebound to 3.38 billion (roughly 2014 levels when there were 3.33 billion travellers), which is well below the 4.54 billion travellers in 2019.
• Overall revenues are expected to be $598 billion which would be a 42% improvement in 2020, but still 29% below 2019’s $838 billion.
• Unit costs are expected to fall as fixed costs are spread across more passengers than in 2020. But the continued virus control measures will limit the gains by reducing aircraft utilization rates.
• Cargo’s enlarged footprint in the air transport industry will remain. Cargo revenues will reach a record $138 billion (a 25% increase on 2020). That is about 23% of total industry revenues, roughly double its historical share. Air cargo demand is expected to be strong as businesses restock at the start of the economic upturn, while a slow return of the passenger fleet will limit the growth of cargo capacity, and keep cargo yields steady at 2020 levels.
• Jet fuel prices are expected to rise to an average of $51.8 per barrel for the year, as global economic activity and oil demand rises. While that will add some cost pressure on airlines, the price per barrel is similar to 2016 ($52.1) and will still be the lowest since 2004 ($49.7).

“Airlines will still be financially fragile in 2021. Passenger revenues will be more than one-third smaller than in 2019. And airlines are expected to lose about $5 for every passenger carried. The cut in losses will come from re-opened borders leading to increased volumes of travellers. Strong cargo operations and comparatively low fuel prices will also give the industry a boost. Competition among airlines will no doubt be even more intense. That will translate into strong incentives for travellers to take to the skies again. The challenge for 2022 will be turning reduced losses of 2021 into the profits that airlines will need to pay off their debts from this terrible crisis,” said de Juniac.

A Challenging Recovery

Although losses will be significantly reduced in 2021 from 2020 levels, the industry’s recovery is expected to be long and challenging. Some factors include:

• Debt Levels: Airlines entered 2020 in relatively good financial shape. After a decade of profits, debt levels were relatively low ($430 billion, roughly half annual revenues). Vital financial relief measures by governments have kept airlines from going bankrupt but have ballooned debt by $120 billion to $550 billion which is about 92% of expected revenues in 2021. Further relief measures should be focused on helping airlines to generate more working capital and stimulating demand rather than further expanding debt.
• Operational efficiencies: The global measures agreed for the industry re-start, for the period that they are implemented, will significantly change operational parameters. For example, physical distancing during embarkation/disembarking, more deep cleaning, and increased cabin check will all add time to operations which will decrease overall aircraft utilization.
• Recession: The depth and duration of the recession to come will significantly impact business and consumer confidence. Pent-up demand is likely to drive an initial uptick in travel numbers but sustaining that is likely to require price stimulus and that will put pressure on profits.
• Confidence: Travel patterns are likely to shift. The gradual opening up of air travel is likely to be progressive, starting with domestic markets, followed by regional and, lastly, international. Research suggests that some 60% of travellers will be eager to recommence travel within a few months of the pandemic coming under control. The same research also indicates that an even greater percentage of potential travellers until their personal financial situation stabilizes (69%) or if quarantine measures are in place (over 80%).

 “People will want to fly again, provided they have confidence in their personal financial situation and the measures taken to keep travellers safe. There is no tried and true playbook for a recovery from COVID-19 but the ICAO Take-off re-start plan outlines globally harmonized measures agreed by health and industry experts. It is important that the industry and governments follow it so that travellers will have the maximum reassurance about their safety. That will be a good start. And depending on how the pandemic evolves, knowledge of the virus deepens, or science improves, industry and governments will be better prepared for a globally coordinated response. That includes the potential removal of measures when it is safe. That will give airlines some breathing room to rebuild demand and repair damaged balance sheets,” said de Juniac.

 

The International Air Transport Association (IATA) has published an interactive map detailing individual country’s Covid-19 entry regulations.

The map uses IATA’s Timatic database, which contains comprehensive information on documentation required for international travel.

The Association says that the database is currently being updated over 200 times per day “to provide accurate travel restrictions specific to the current pandemic, based on one’s citizenship and country of residence”.

In addition, travellers can subscribe to real time notifications for all travel updates related to the pandemic, again powered by the Timatic database.

The release follows a recent IATA survey which showed that over 80 per cent of travellers were “as concerned about potential quarantine restrictions as they are about actually catching the virus during travel”.

Commenting on the news Anish Chand, IATA’s Assistant Director, Timatic, said:

‘’As the aviation industry prepares to safely restart, travellers will need to know which countries’ borders are open and what health restrictions exist. Travellers can rely on Timatic for comprehensive and accurate information on travel during the pandemic.

‘’We support the International Civil Aviation Organization (ICAO) guidelines to harmonize the measures to keep people safe while traveling and provide the confidence to open borders without quarantine measures. And this Timatic offering will be a vital tool for travellers who need easy access to accurate information on entry requirements.”

 

Source: https://www.businesstraveller.com/business-travel/2020/06/11/iata-publishes-covid-19-entry-regulations-map/

 

Etihad Airways on Wednesday launched a voucher giving 50 per cent extra cash value to passengers for travel during the two-year period starting August 1. Air travel across the world has drastically reduced amid the coronavirus pandemic and airlines have been taking various measures to improve cash flow.

In a press release, Etihad said passengers can purchase the travel voucher, any time between June 10 and June 24, and they will get 50 per cent extra cash value in the voucher, which can be used for travel during the two-period starting August 1.

Scheduled international passenger flights continue to remain suspended in the country since March 23.

However, after a gap of two months, domestic passenger flights began in India from May 25.

“Etihad Travel Vouchers are available in increments of USD 250 to a maximum of USD 65,000. The value of the purchased voucher plus 50 per cent extra credit will be added to a Travel Bank account for future redemption on flights, upgrades and extras,” said the airline.

Global airlines body IATA said on Tuesday that carriers across the world are expected to lose USD 84.3 billion in 2020, calling it the “worst year in the history of aviation”.

Even as the number of coronavirus cases continue to rise globally, various countries have resumed domestic and international air travel, albeit with much precautions and in a curtailed manner.

Source:
https://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/etihad-airways-launches-travel-voucher-offering-50-cash-bonus/articleshow/76307213.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Kenya Airways (KQ) has started cargo flights to the United Arab Emirates (UAE) as the carrier seeks to generate more income from freight following the grounding of passenger services.

From last week, the carrier will initially run two weekly flights to the Sharjah International Airport until demand grows.

Dick Murianki, director of KQ Cargo, said the airline has continued to increase its focus on cargo operations “during these unprecedented times” of the Covid-19 pandemic, keeping essential goods and supplies moving.

“We are very pleased to begin operating to Sharjah International Airport. This route serves as a strategic gateway linking cargo in Africa to the Middle East and other parts of the world. The Covid-19 crisis has come with many negatives, but it has also come with opportunities for us to leverage on, particularly with our cargo business,” said Mr Murianki

KQ will mainly carry meat products, including tropical fish, fresh fruit and flowers and general cargo to Sharjah and return with general cargo and high-tech goods.

Sharjah International Airport is considered a competitive freight hub in the UAE and provides opportunities to KQ to grow its cargo business.

“KQ has been implementing different strategies to boost its revenues and retain a competitive edge in the market all geared towards a turnaround of the business,” he said.

The carrier said despite the effects of Covid-19, Kenya Airways has been able to go into a new destination and the carrier is now able to take cargo from Sharjah directly to Nairobi.

The airline said trafffic had been increasing towards April, as most countries started making their own PPEs, which formed the bulk of the cargo when Corona broke.

“In April, we had high yield traffic movements of PPEs predominantly moving on charter basis. This segment is fizzling out given majority of countries have evolved locally production capabilities. What we see now is a gradual return to normal general cargo and perishable traffic,” said Mr Murianki.

KQ said with the expected return to service of passenger operations, cargo volumes are expected to improve to 3,500 tonnes by end of July from a low of about 2,000 at the moment.

Source: https://www.businessdailyafrica.com/news/KQ-starts-cargo-flights-to-UAE/539546-5573778-ctkvpez/index.html

 

The Kenya Association of Travel Agents (KATA) will soon be adopting a policy that will see travel agents cease extending credit facilities for travel to their customers.

Among the affected will be corporate companies, government agencies, NGOs and traders who book for travel and pay over an extended period of time.

This policy, KATA Board of Directors Treasurer Dr Joseph Kithitu said, will ensure that travel agents deal with cash paying clients and therefore are able to remain operational in times of crisis as seen with the COVID-19 pandemic.

To solve cash flow problems, Dr Kithitu emphasised on the need for travel agents to stop extending credit to their clients. “Travel post pandemic needs to be on cash basis. KATA is working with TRA on setting up frameworks that will see travel agents paid on cash basis,” Dr Kithitu said.

He noted that travel agents had undergone a traumatic period brought on by the pandemic that is highly contagious.

“Many businesses have closed down and have had to let go of staff because there is no money coming in with the travel restrictions that are in place.

“All we can do now is chase after payment from government, corporates and our other clients. Business during this period is made harder by the fact that airlines are not refunding travel agents for travel that was already booked during the Coronavirus period,” he stated.

He added, “with no credit extended to our clients, we will be able to align our businesses to deal with the new normal. We may not push as many volumes as before, but we will be able to remain operational even through such crisis”.

Since the first case of infection was first reported in the country in March, business has dropped to a negative for travel agents with the government announcing travel restrictions within the country and a ban on international flights as a way of mitigating the spread of the virus.

Travel agents remain hopeful that travel restrictions will be lifted and travel may resume under the laid down safety protocols to ensure that even as business runs, the spread of the virus remains contained.

Travelers may reach out to their trusted and certified KATA agents for more information on the current laid down procedures and protocols as advised by government.

Following the UAE Federal Government’s announcement to lift restrictions on transit passengers services, from 15th June Emirates will offer passenger services to 16 more cities on its Boeing 777-300ER aircraft. With travel restrictions remaining in place in most countries, customers are reminded to check entry and exit requirements before their journeys.

Flights to the following cities will be available for booking on emirates.com or via travel agents: Bahrain, Manchester, Zurich, Vienna, Amsterdam, Copenhagen, Dublin, New York JFK, Seoul, Kuala Lumpur, Singapore, Jakarta, Taipei, Hong Kong, Perth and Brisbane.

In addition, from 8th June Emirates will offer flights from Karachi, Lahore and Islamabad for travellers from Pakistan who wish to connect onwards to other Emirates destinations.

With this latest announcement, Emirates will be offering flights for passengers on the back of its scheduled cargo operations from Dubai to 29 cities, including existing flights to London Heathrow, Frankfurt, Paris, Milan, Madrid, Chicago, Toronto, Sydney, Melbourne and Manila (from 11th June).

Customers can book to fly between destinations in the Asia Pacific and Europe or the Americas, with a convenient connection in Dubai, as long as they meet travel and immigration entry requirements of their destination country.

Working closely with the UAE authorities, Emirates continues to take a measured and phased approach to flight resumption and rebuilding connections between Dubai and the world.

Health and safety first: Emirates has implemented a comprehensive set of measures at every step of the customer journey to ensure the safety of its customers and employees on the ground and in the air, including the distribution of complimentary hygiene kits containing masks, gloves, hand sanitiser and antibacterial wipes to all customers.

Travel restrictions: Customers are reminded that travel restrictions remain in place, and travellers will only be accepted on flights if they comply with the eligibility and entry criteria requirements of their destination countries. Residents returning to the UAE can check the latest requirements at: https://www.emirates.com/ae/english/help/flying-you-home/

Customers can find more information about Emirates’ flights and current services at: https://www.emirates.com/ae/english/help/essential-travel/#75478

Source: https://www.emirates.com/media-centre/emirates-offers-flights-for-passengers-to-29-cities-and-resumes-transits-through-its-dubai-hub/

 

Kenyan taxpayers are set to feel the full weight of owning a bigger stake of the national carrier, as the airline reported a $130 million (Ksh13 billion) full-year loss at a time when it is seeking a government bailout to sail through the Covid-19 pandemic.

Kenya Airways last year underwent a series of capital and debt restructuring that elevated taxpayers to the biggest shareholders of the financially troubled carrier.

The Treasury last year extended a $50 million bailout to the airline, and is currently evaluating another $70 million funding request to help the carrier cope with revenue loss during the coronavirus pandemic, which has disrupted air travel across the globe.

“As you know we have been grounded for nearly three months now and during that time we have maintained all 38 aircrafts whether flying or not flying, we have to pay our leases, we have to pay the insurance costs, and we have a number of costs that don’t go away whether you are flying or not flying. In addition, we still have to pay salaries and so we have asked for money from the government and we are still waiting to hear about that,” said the Kenya Airways chairman Michael Joseph at a press briefing this week.

De-listing from NSE

The airline has run short of cash to finance its operations including maintenance of aircrafts, payment of leases and employee salaries.

KQ is 48.9 per cent owned by the government and a group of 10 local banks that hold 38.1 per cent of its shares.

Other shareholders include KLM Royal Dutch Airline (7.8 per cent), employees (2.4 per cent) and other shareholders at 2.8 per cent.

But the airline is set to be delisted from the Nairobi Securities Exchange (NSE), after parliament last year approved its takeover by the State.

The carrier, which is grappling with a negative working capital of Ksh42.15 billion, saw its net loss for 2019 widen to Ksh12.97 billion ($129.7 million) from Ksh7.58 billion($75.8 million) in 2018.

Its management says it has halted route network expansion and embarked on a review of the existing ones with a view to further abandoning and reducing frequencies on what it considers to be non-profitable flights.

The latest are part of raft of the new measures that the troubled national carrier is considering to stay afloat in the wake of the Covid-19 pandemic that has grounded 90 per cent of its operations in the past three months.

Long-term survival

Other measures include diversification into the cargo business, digitisation of its operations and the consolidation of the aviation sector assets as the airline looks for long term survival techniques.

The management blamed the losses on fleet ownership costs, increased costs on new routes and frequencies and increased financing costs related to interest on loan repayments, foreign exchange movements and adoption of the new accounting standard — (IFRS16).

The devaluation of the airline’s assets also reduced the firm’s revenues by Ksh6.73 billion ($67.3 million).

Its total revenues increased by 12 percent to Ksh128.31 billion ($1.28 billion) from Ksh114.18 billion ($1.14 million) helped by cargo load and passengers fares on new routes — Geneva, Rome and Malindi — while operating costs increased by the same margin to Ksh129.17 billion ($1.29 million) from Ksh114.86 billion ($1.14 million).

Chief executive Allan Kilavuka said the future of the aviation industry remains uncertain in the wake of the Covid-19 pandemic that has seen governments put in place measures to control the spread of the virus including suspension of international flights to enforce social distancing regulations.

“We are not going to invest in any new route going forward of course. We are going to look at the routes that we have invested in and see whether we want to continue with that investment because any route has an investment,” Mr Kilavuka told an investor briefing in Nairobi last week.

“In some cases we will stop flying to some destinations, in other cases we will reduce frequencies and in other cases we will suspend operations. There are different things we are looking at so that we can respond to the market in the new context.”

The airline estimates that passenger demand in Kenya alone will drop by about 3.5 million this year, while global traffic is forecast to decline by 4.7 percent, causing the first overall decline in demand since the Global Financial crisis of 2008-2009, according to the International Air Transport Association (IATA).

The IATA also forecasts that the global aviation industry will lose $29 billion worth of passenger revenues this year, of which $40 million will be linked to African airlines.

Three-year recovery

“The times ahead of us are very uncertain but like I said, if you look at the immediate future the year 2020 is obvious not going to be business as usual, the aviation sector will take time to recover,” said Kilavuka.

“There have been very many hypotheses, some are predicting a three-year recovery period, some are predicting a one-year recovery period but the general consensus is that there will be a drop in passenger numbers by at least 50 per cent. My own estimate is slightly more than that. In Kenya in particular we see that the demand for passenger travel we estimate that it is going to drop by about 3.5 million passengers. So it means is that we need to adapt to this new context.”

KQ increased its losses for the year 2018 to Ksh7.5 billion ($75 million) from Ksh6.4 billion ($64 million) in 2017.

Its net loss for the six months’ period to June 30 2019 more than doubled to Ksh8.5 billion ($85 million) from Ksh4 billion ($40 million) in the same period the previous year (2018).

Source: https://www.theeastafrican.co.ke/business/Taxpayers-to-bailout-KQ-as-it-sinks-into-a-further-loss/2560-5569164-1307f7j/index.html