Companies

KQ share price dips below Sh1 on financial woes

Kenya Airways’ #ticker:HQ share price Wednesday dropped below the Sh1 mark to trade at Sh0.97 at the Nairobi Securities Exchange (NSE), sunk by pressure from the airline’s financial woes that have been worsened by international travel restrictions.

The drop represented a 6.73 percent decline from the previous day. The national carrier shed off Sh31 million to record Sh5.57 billion in market capitalisation compared to Sh5.9 billion the previous day.

Analysts have attributed the fall to concerns about revenue generation by the firm as the global airline industry remains negatively affected by the Covid-19 pandemic.

“Globally, a number of airlines are struggling. KQ revenues are expected to drop and hence investors are selling stocks. Losses are also expected to be very high this year,” AIB Capital head of research Sarah Wanga said. “Investors are still waiting on a clear indication on nationalisation plan.”

“The stock has been trading on a speculative basis. Negative impact on international travel restrictions and local containment measures have elevated negative sentiment on the stock,’’ Churchill Ogutu, head of research at Genghis Capital, added. Last month, Kenya Airways CEO Allan Kilavuka told the Business Daily that the airline had sent an emergency notice for additional funds to both the Treasury and the Ministry of Transport.

The airline said the funds were expected to help in maintenance of grounded planes, payment of staff salaries and settlement of utility bills like security, water and electricity.

The company has taken a major hit following a freeze on international passenger travel in the wake of the global coronavirus pandemic, leaving cargo as the only revenue driver.

KQ recently announced plans to ground some of its cargo planes due to a shortage of flight staff after the national carrier’s 283 cabin crew were put in mandatory quarantine, increasing the airlines expenses by more than Sh80 million in occupancy bills.This is despite the loss-making firm having been granted regulatory approval to convert some of its 41 passenger planes grounded by the pandemic for shipment of cargo to Europe and Asia, raising its hope for revenue.