Kenya Airways (KQ) #ticker:KQ expects to resume passenger travel as soon as the government opens the skies for both local and international flights, ending months of lost revenue due to the Covid-19 global pandemic.
There are indications that air travel will be fully operational by the third quarter of the year.
The airline sees this as the best-case scenario, but cautions that the ultimate length of suspension of the passenger flight business is still uncertain.
The airline stopped international flights after a State order on March 22. The order effectively cut off Kenya Airways’ flow of new revenues at a time it had no cash reserves.
“There is reasonable expectation that the flights could resume in the third quarter of the year with business expected to have started at very low capacity and a gradual ramp-up, influenced by gradual lifting of travel bans, uncertain passenger confidence and health safety measures,” KQ says in its latest annual report.
The airline says that discussions with key industry stakeholders are on in relation to safe return to passenger routes. It is expected that the airline will be able to cover its variable costs on resumption.
“The resumption is expected to happen within the period of the moratoriums already being negotiated with lenders and lessors and thereby allowing the airline to grow back its revenue base and gradually cover its fixed costs,” says the airline.
KQ has been operating only cargo flights for essentials such as medicine but this has not been enough to sustain business given that it was already in a loss territory pre-coronavirus.
Chief Executive Officer Allan Kilavuka had unsuccessfully applied for a bailout from the National Treasury to help meet maintenance costs of grounded planes, pay salaries and settle utility bills like security, water and electricity.
President Uhuru Kenyatta on Saturday took a cautious approach to the pandemic, warning that relaxing measures such as curfews and containment of certain counties by just 20 percent would lead to 200,000 infections and 30,000 deaths by December.