Kenya Airways #ticker:KQ expects a 20 percent rise in revenue this year, its chief executive told Reuters, as it battles to end losses in its passenger business and recover from the effects of the COVID-19 pandemic.
The airline, in which the government has a 48.9 percent stake, saw revenue plunge by half at the height of the pandemic in 2020, as carriers around the world were forced to ground their planes.
"We have been through the worst patch," chief executive Allan Kilavuka said in an interview, noting passenger revenue had grown 21 percent in 2021 as a recovery started.
That helped the airline's loss narrow by a fifth during the first half of last year, but it still lost Sh11.5 billion ($101 million) during the six months.
Kenya Airways had slipped into insolvency long before the pandemic, mainly due to an expansion drive that saddled it with hundreds of millions of dollars in debt to finance the purchase of new planes, followed by travel warnings in 2013 due to insecurity in the country.
Aviation consultant Seabury was hired last month to advise on returning to profitability and its report is expected in the next three weeks, Kilavuka said. "We are looking for a more efficient airline. The network should not lose money."
Forward bookings for the peak summer travel season were promising, he said, adding the airline was hoping an election in Kenya scheduled for August 9 would not cause disruption.
Two out of the last three elections in Kenya saw significant violence, hurting the travel industry and the wider economy.
This year's Kenya Airways growth forecast is dependent on no further travel disruption or restrictions caused by any new coronavirus variants, the CEO said.
Although African carriers are starting to see a recovery, the continent's airline industry is lagging that of Europe, Asia and the United States, Kilavuka said.
Cargo, which accounts for some 10 percent of revenue at Kenya Airways, performed well during the pandemic, he said. After passenger demand slumped the airline converted two passenger jets to carry goods.
But Kenya is still suffering from a 40 percent deficit in required cargo capacity, he said, adding European operators who previously served the country had opted for more lucrative routes between China and the West.
The government is seeking to take over $750 million of Kenya Airways debt, which it had guaranteed in 2017, as part of the restructuring effort, Kilavuka said.
However it will still be dependent on direct government support in its fiscal year ending June 2022 and the following year, as Kenyan Finance Minister Ukur Yatani noted in December, underscoring the need for cost-cutting measures. read more
Kilavuka said efforts to turn around the airline would involve a critical look at staffing and the renegotiation of contracts with suppliers and plane leasing firms.
($1 = 113.5500 Kenyan shillings)