Kenya Airways CEO seeks $500m from state to survive virus

Kenya Airways needs at least $500m to ride out the coronavirus crisis after first-half revenue plunged almost 50%, CEO Allan Kilavuka said. The carrier, which is 49% state owned, must also be fully nationalized alongside Kenya Airports Authority, which runs the Nairobi hub, under a holding structure similar to that of regional leader Ethiopian Airlines Group, he said. “If we don’t restructure the airline, and take the airline as is into this organization, then we are doing a disservice to the taxpayer,” Kilavuka said. “Right now it is under-capitalized, given the effects of Covid.” Kenya Airways hasn’t given up on its ambitions of one day rivaling Ethiopian, according to the CEO, though it will be a long stretch to match up with Africa’s largest and most consistently profitable airline. In the meantime, the company is focused on cutting labor and plane-lease costs, its biggest fixed expenses, by $66m through the end of 2021. Projections indicate that Kenya Airways will need only 24 aircraft over the next two or three years, out of a current fleet of 34 passenger planes and two freighters, Kilavuka said. Talks are underway with six leasing firms on swapping fixed rentals for utilization-based terms, while other proposals include converting unneeded airliners for short-term cargo use. Talks with unions are focused on eliminating costs without resorting to the 1,400 job cuts the company says may be needed. Measures will need to deliver 40% savings to match continuing revenue declines, the CEO said. In the interim, staff are drawing reduced pay and deferring the balance to a later date.<br/>