Treasury Cabinet Secretary Ukur Yatani has underlined that the government will allocate funds to struggling national airline Kenya Airways (KQ) to help cover its planned restructuring costs should the carrier meet a few prerequisites.
But for this to happen, KQ will be required to reduce its networks, rationalize frequencies of flights and staff and trim its airplane fleet.
According to CS Yatani, this will boost KQ’s chances of recovering from the adverse economic effects that COVID-19 had on the aviation industry.
“The Government as a major shareholder is supporting the restructuring of Kenya Airways to adapt to the challenges facing the aviation industry due to the adverse impact of COVID-19 pandemic,” the CS said when he read the 2022/23 budget in Nairobi on Thursday.
“Kenya Airways plays a major and catalytic role in the economic development of this country. The airline is facing severe cash-flow constraints following global lockdowns triggered by the COVID-19 pandemic.”
In the full year ended December 2021, the airline more than halved its net loss to Ksh.15.9 billion. The carrier posted a 56.1 per cent trim to its net losses in the year from a historical record loss of Ksh.36.2 billion in December 2020.
KQ’s improving net loss is largely attributable to improving revenues with the company’s turnover rising by 33 per cent to Ksh.70.2 billion from Ksh.52.8 billion.
This is on the back of an 11.5 per cent growth in capacity during the year with the number of passengers lifted for instance increasing to 2.2 million from 1.8 million a year prior.
KQ also cut its overall operating costs by 3.6 per cent to Ksh.86.2 billion from Ksh.89.4 billion in the period under review.
The cost cuts cover Ksh.11.6 billion in savings from fleet ownership and Ksh.902 million from a slowdown in new staff hires.
KQ has attributed the improved results to efforts to diversify its revenue streams alongside the cost containment measures.