KQ narrows losses to Sh9.88 billion as travel demand picks

By Steve UMIDHA

Kenya Airways (KQ) Wednesday announced a lessened loss of Sh9.88 billion in its second-quarter results, which is thinner than the Sh11.48 billion loss the struggling airline reported in the same period last year.

It attributed the improved performance on recovering global air travel but cast concerns over high fuel costs on its overall performance resulting from the Russian –Ukraine war.

KQ’s revenues jumped to Sh48.10 billion on account of higher booking revenues even though its operating costs grew by half to Sh53.11 billion on the back of a sharp rise in global prices of fuel.

“The opening of borders around the world has led to quick rebounds in some key markets,” said KQ chairman Michael Joseph. We continue to focus on the restructuring process that started at the end of last year. Through this…we aim at structurally reducing our overall costs of operation and optimizing our network,” he added.

Kenya Airways received a further Sh36.6 billion bailout in the year starting July as part of efforts to prop up the airline amid recovery from the Covid-19 travel slump. This will see KQ receive a total of Sh56.6 billion in under a year, making it the largest corporate bailout in Kenya.

KQ is one of the 18 state agencies the International monetary fund (IMF) has flagged for restructuring as part of the lender’s condition for the USD2.34 billion loans it granted in April 2021.

Besides the 18 loss-making parastatals flagged by the global lender, nine more Parastatals are in the list of firms suggested for privatization.

The national treasury noted at the time that after a thorough financial assessment, the enterprises had an outstanding Sh170 billion in government-guaranteed debt as of December 2020.

Others are Kenya Railways Corporation, Kenya Power and three public universities were in the initial list.

Also on the list are Kenya Broadcasting Corporation, Athi Water Works Development Agency and Kenya National Examinations Council, as well as Kenya Wildlife Service, Kenya Post Office Savings Bank, Kenyatta National Hospital and E.A. Portland Cement.

The treasury analysis established that the state agencies in question have an estimated liquidity gap of Sh382 billion over the next five years.

The tone of privatization debate has evolved in recent years in international financial institutions like the IMF and the World Bank, as privatization activity has shifted towards developing economies, and as a consequence of the difficulties of implementation and some privatization failures in the 1980s and 1990s.

As a result, more emphasis in policy-making is now being placed on creating the preconditions for successful privatization akin to IMF’s recent demands.

The expected restructuring of the parastatals – which is currently ongoing in some companies, will unavoidably see thousands of civil servants retrenched.