Kenya Airways Seeks State Support to Survive Next Six Months
Kenya Airways Seeks State Support to Survive Next Six Months
(Bloomberg) --
Kenya Airways Plc. is appealing for a cash bailout from the government to be able to survive the next six months as the partially state-owned carrier runs out of money after grounding all international flights to help contain the coronavirus.
It will cost the airline about $5 million a month to manage its grounded fleet and retain a workforce operating on lower pay from this month, Chairman Michael Joseph said by phone. The company was already losing $8 million a month before the Covid-19 pandemic forced it to shrink its network.
“You have these massive airplanes that cost an enormous amount of money whether they fly or not,” Joseph said. “We’ve asked the government for some assistance to take us through six months. Let’s see what they come back with.”
Airlines all over the world have been laid low by the impact of the coronavirus on global travel, and the industry is expected to burn through as much as $61 billion worldwide in the second quarter alone, industry group IATA predicted on Tuesday. That’s made airlines that were already struggling particularly vulnerable, including Kenya Airways.
Kenya Airways is almost 50% owned by the government, the outcome of an earlier state-backed restructuring in 2017, and lawmakers were considering a full nationalization before the global aviation crisis brought on by the pandemic. Even if granted a bailout, the carrier will have to review its network and consider taking on a strategic investor to remain a going concern in the longer term, according to Joseph.
“Of course it will take us a long time to recover,” the chairman said. “I think initially when we come out of this there’ll be a growth spurt of people travelling but then it will slow down again. Every airline including Kenya Airways has to review is strategy.”
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