The Fuel Factor Skyrocketing Kenya Airways Loss

Joy Waweru | 1 year ago
A Kenya Airways Plane File:Photo

Expensive fuel has single-handedly contributed to Kenya Airways' losses by three times.

These losses have been recorded between January and June 2022.

Going by last year’s fuel prices, the pre-tax loss of about 9.86 Billion  would have been much lower to the tune of 3.32 Billion

Reiterating the fuel factor, Mr.Allan Kilavuka the Managing Director of KQ said that the company would have only made a third of the current loss had fuel prices remained constant as the previous year.

In a period of one-year fuel prices had increased by over 200%

Should the prices of fuel continue going higher, losses shall continue to increase. Fuel consists of 20%of airline costs.

The war in Ukraine has also contributed to the rise in fuel prices. Aside from fuel prices, other factors leading to unprecedented losses are global and local inflation, interest rates, and exchange rates. This has affected travel.

However, compared with the previous year, the losses have gone down by fifteen percent. This is greatly attributed to higher revenue through cargo and passengers due to the opening up of borders following the ease of COVID-19 restrictions.

Kenya Airway’s Chief Finance Officer Hellen Mwariri said that judging by the reports of the first half of 2022 the company is still on the losses making trend but has greatly improved from the deepest it had ever sunk in 2020 when it made losses of the tune of 35 Billion.

The Kenya Airways Company says it will continue to rely on the National Treasury for financial support. There is a program underway between the government and the International Monetary Fund which should end by June 2023.

As a cost mitigation mechanism, the company plans to return two aircraft to their lessor after the expiry of the term of the contract.

Managing Director Mr.Allan Kilavuka stated that the company had halted all onboarding of new members of staff. This way the organization has been able to reduce staff costs.

Africa routes are most lucrative for the Kenyan carrier.

Kenya Airways which has been bailed out by The National Treasury hopes to be making profits by 2024.

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