Kenya Airways to lay off staff, reduce network and assets, CEO says
The coronavirus pandemic has hit the global aviation industry hard, with African carriers alone expected to lose US$6 billion in revenue this year
Kenya Airways will lay off an unspecified number of workers, reduce its network, and also get rid of certain assets, because of the coronavirus crisis, the airline’s chief executive said in an internal memo seen by Reuters.
“Our short- and medium-term projections indicate that we must inevitably reduce our operations before we begin to scale up again,” Allan Kilavuka wrote in the memo, dated 3 July, adding that the exercise will be completed by 30 September 2020.
The carrier, in which Air France-KLM holds a small stake, was struggling long before the outbreak, posting losses in 2019 of almost US$122.2 million.
It cut salaries by as much as 80% when the crisis started. It also sought a government bailout to help it take care of running costs after it grounded its planes when Kenya stopped commercial passenger flights to curb the spread of the virus.
The government declined to bail it out, choosing to press ahead with a pre-pandemic plan to nationalise the carrier, part of wider reforms of the East African nation’s aviation sector.
Drastically reduced demand
Michael Joseph, the airline’s chairman, said the decision to lay off workers and reduce operations was not informed by the failure to secure a bailout.
“We have to face the fact that demand for air travel is going to be reduced significantly for the next two to three years,” Joseph told Reuters on Monday, adding that other carriers were taking similar actions.
“We have delayed taking this action for too long.”
On Friday, the Nairobi Securities Exchange suspended trading of Kenya Airways shares for three months, citing the government’s plan to restructure the carrier, after it submitted a bill on the nationalisation of the airline to Parliament.
The African Union (AU) Commissioner for infrastructure and energy, Amani Abou-Zeid, says many airlines in Africa will not survive COVID-19 because of a huge drop in revenue.
Dr Abou-Zeid said African countries have lost almost $55 billion in travel and tourism revenues in three months because of the coronavirus pandemic.
Aviation losses top $84 billion in 2020
In June, the International Air Transport Association (IATA) said the industry will lose roughly $84 billion by the end of this year.
All regions have been affected by the outbreak of the novel coronavirus and will report record losses, with revenues falling by over 50%.
In a financial outlook report, IATA said: “Financially, 2020 will go down as the worst year in the history of aviation.”
2.2 billion passengers
The report highlights that, with an estimate of 2.2 billion passengers carried this year, airlines will lose $37.54 per passenger, on average. The average loss per day for the rest of this year will probably come to $230 million and total $84.3 billion across the year.
The average of 2.2 billion passengers this year is roughly equivalent to 2006 levels. In effect, COVID-19 has set the industry back by over a decade.
At the lowest point in April, passenger demand was 95% lower than in 2019. IATA predicted that traffic levels for the whole of 2020 will still be just 55% those of the previous year.
