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Kenya Airways Plc expects demand for air travel for the rest of this year to be less than half the level in 2019 due to the ongoing effect of the Covid-19 pandemic.
The partially state-owned East African carrier is starting to resume international flights after the government eased travel restrictions it imposed to help contain the coronavirus. The anticipated slow pace of recovery means the focus for the rest of the year will be on “ensuring the survival of the company,” the airline said in a statement Friday.
Kenya Airways reported a loss of 21 billion shillings ($194 million) for the six months through June, up from 8.1 billion shillings a year earlier, while revenue slumped by almost 50%.
Kenya’s government is working on a plan to fully nationalize the carrier, whose financial troubles were exacerbated by the impact of the pandemic on aviation that has led many airlines around the world to seek state help. That will require a buyout of shareholder Air France-KLM, which owns a 7.76% stake, and a group of lenders who swapped their debt for equity as part of an earlier restructuring.
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The airline is currently flying to three destinations in Europe and will resume trips to the U.S. in October, Chief Executive Officer Allan Kilavuka said during a briefing. Kenya Airways is flying to 22 routes in Africa and four in Asia and the Middle East, he added.
“These reduced frequencies and destinations will require us to operate a smaller fleet. We’re talking to lessors into order to return the aircraft early,” he said.
The Nationalization of Kenya Airways may be concluded by year-end or in early 2021, Chairman Michael Joseph said during the briefing.
The company is going through valuation, and the National Treasury is in discussions with minority shareholders on how to “take them out,” Joseph said. “We are hoping it will not have to be an immediate cash outlay for the government,” he said.
(Adds details on planned nationalization from seventh paragraph.)