Kenya Airways in crisis with worst ever financial results
Kenya Airways (KQ) has reported a worse than expected pre-tax loss of $295million for its full year results.
This is the biggest loss to ever be reported by a Kenyan company and six times worse than the losses in the previous year.
"There has been a reduction in tourism numbers. We are a significant carrier of tourists into the country," said KQ Managing Director Mbuve Ngunze
The airline, part-owned by AirFrance-KLM, also told an investor briefing it had chosen Cairo-based African Export-Import Bank (Afreximbank) to advise it on capital raising and to arrange a $200 million bridging loan.
Shareholders and analysts raised concern over the airline’s ability to survive any longer after it posted a negative equity of $300 million, which meant that without the bridging loan, the company is insolvent
The carrier has faced rising debts due to new aircraft purchases while Kenya's tourism industry, a key source of passengers, has slumped following a spate of Islamist militant attacks.
"We had growth of the fleet which was not matched by revenue growth," Finance Director Alex Mbugua told Reuters news agency, referring to the purchase of Boeing 787 Dreamliner planes, which started in 2013.
KQ, has been in an aggressive aircraft purchase programme that has seen its fleet rise from 43 to 52 including two freighters
Alongside a slowdown in tourism, Mbugua told Reuters that the airline was hurt by competition from Gulf carriers.
Kenya had a large fuel hedging position which also meant it had been unable to capitalize on the lower fuel costs that has led to a number of other airlines turning into profit.
The airline has said it plans to sell some aircraft as well as a piece of land in Embakasi to raise additional capital.