The financial woes facing Kenya Airways seem to be far from being over. As the once vibrant airline continues to register one major loss after another, its CEO now says that it needs at least 50 billion shillings to survive.
Allan Kilavuka, the CEO of Kenya Airways said that the Airline needs at least 50 billion shillings to survive through the COVID-19 situation after first half-year revenue plunged almost 50 percent.
He said part of the recapitalization would pay of part of the debt after the company’s liabilities increased to 218.9 billion shillings at the end of June while providing capital for growth once markets begin to rebound.
Kilavuka added that the company has and is focused on cutting labor and plane-lease costs, which are its biggest fixed expenses, by $66 million through the end of 2021.
“If we don’t restructure the airline, and take the airline as it is into this organization, then we are doing a disservice to the taxpayer. Right now it is under-capitalized, given the effects of Covid-19,” Kilavuka said.
Kenya Airways has laid off about three-quarters of its staff including pilots in the last few months immediately the president opened the economy giving a go-ahead to the resumption of flights.
He added that the company’s other proposals include converting unneeded airliners for short-term cargo use.
This move is focused on eliminating costs without resorting to the 1,400 job cuts which according to KQ may be inevitable.
Projections indicate that Kenya Airways will need only 24 aircraft over the next two or three years, out of a current fleet of 34 passenger planes and two freighters, Kilavuka said.
“We want Kenya to be the preferred hub for the region,” he said. “For that to happen the airport needs to grow and modernize and the airline needs to be efficient and responsive to the needs of the market.”