Kenya Airways pre-tax losses deepened to KSh13 billion ($120 million) for the year ending December 2019 despite increasing passenger levels and revenues. The SkyTeam carrier lifted revenues 12% to KSh128.3 billion. That was in part due to a 7% rise in passenger numbers to 5.1 million, during a year in which the carrier added flights Geneva, Rome and Malindi. The airline also brought two Boeing 787-8s, which had been sub-leased to Oman Air, back into service. This contributed to a 15% increase in its ASK capacity. The carrier says the return to service of the two Dreamliners, together with costs associated with the new routes and frequencies, contributed to an increase costs of 12%. But a move to IFRS 16 accounting standards increased its overall financing costs, which jumped 76%. “Despite the tough market environment, Kenya Airways is in the process of recalibrating its business to create a model that is agile, responsive, and even more relevant to the market. We are making positive strides and we will not lose focus on our picture of success which we are working towards,” the carrier’s chairman Michael Joseph says. The deeper loss comes even before the impact of the coronavirus crisis. The airline’s new chief executive Allan Kilavuka, who took the helm in February, says: “Going forward, it will not be business as usual as the aviation industry will see significant changes as a result of the Covid-19 pandemic. ”We therefore must stay ahead of the curve to ensure we are ready to create many opportunities for growth and leverage all the others that come our way.”

Source: Cirium

Business rescue practitioners at South African Airways describe as “reasonable” the prospects of rescuing the struggling carrier, though stress this is dependent on the necessary funding. In an update issued to “affected parties” today, the joint business rescue practitioners appointed to oversee the carrier after it entered formal restructuring late last year, say they are now holding discussions with the airline’s shareholder - South Africa’s public enterprises ministry - to possibly restructure the airline. ”An announcement in this regard will be made in due course as well as an agreed timeline for the consultation on the business rescue plan as well as its publication,” they say. ”It is the considered view of the business rescue practitioners that there is still a reasonable prospect of rescuing SAA, subject to the receipt of unequivocal commitment thereto and the requisite funding. This will be set out in the business rescue plan to be published in due course.” In a wide-ranging update, the business rescue practitioners also say the airline has been granted leave to appeal a labour court ruling which backed the NUMSA and SACCA unions bid to prevent planned staff cuts. The airline told staff it does not have sufficient funds ”to continue honouring the obligations of SAA to its employees” beyond 30 April and has placed all staff on unpaid absence with effect from 1 May. It says staff continuing to work to operate the airline’s limited repatriation and cargo flights are being remunerated. The practitioners note a forum comprising the public enterprises ministry, unions and non-unionised bodies at the airline proposed pay cuts for May. ”However, SAA does not have sufficient funds available to pay salaries to all of its employees and, in fact, does not have sufficient funds to pay certain of its post-business rescue costs,” the administrators say. The update also addresses the roughly R10 billion ($572 million) utilised in running the airline in the five months ending April 2020. This figure was highlighted during evidence given to a parliamentary committee on 15 May. “Contextually, it is worth noting from the 2017 financial statements and the draft financial statements for 2018 and 2019 that the operating costs for SAA were at least R30 billion per annum amounting to an spend of R2.5 billion per month,” it says, noting it has cut operating costs by around R500 milion a month. Earlier today, the administrators called into question an SAA statement that it hoped to resume domestic flights in the middle of June, saying the cessation of flights “remains as is until SAA has a better sense of what the Level 3 lockdown means in terms of domestic air travel”.

Source: Cirium

Ecuador's government has announced the closure and liquidation of most major public companies, including state-owned airline TAME. The nation's president Lenin Moreno linked the measure to the economic situation created by the Covid-19 pandemic, which has hit Ecuador particularly hard. Marco Avila, president of state holding company Empresas Publicas, says that while the pandemic ultimately made TAME's situation unsustainable, its future was questionable even before the current crisis. Transport minister Gabriel Martinez notes that TAME "reported losses in nine of the last 12 years" and puts the airline's accumulated debt load at $311 million. "This year we planned for a net loss of $45 million, but this figure would be vastly higher because of the coronavirus-caused traffic collapse," he adds. The liquidation of TAME and other state assets will be assessed during a first phase in which debts and labour obligations will be addressed. After four to six months, the corporations will enter their respective liquidation processes. TAME, founded in 1962 as an airline owned and operated by the air force, became a civilian government-owned airline a decade ago to comply with ICAO safety-oversight regulations. After giving up most international routes, selling its Embraer 170, and returning to the lessor its sole Airbus A330 widebody, used for flights to New York in recent years, the airline until March 2020 continued operating a network of 11 mostly domestic destinations with three ATR 42-500 turboprops and a pair of Airbus A320-family narrowbodies. It also operates several single-engined aircraft to remote airfields in the Amazonas region. TAME held a 34% domestic market share. Transport minister Martinez says $16 million has been reserved for severance packages for all 932 TAME employees and that "no destination will lose its air connectivity" as the consequence of the airline's final grounding. LATAM Ecuador has already confirmed plans to launch operations to Santa Rosa and Loja, and the minister says "negotiations to operate flights to Esmeraldas and Lago Agrio are under way with Avianca Ecuador and [Cuenca-based, currently inactive] AeroRegional". For any destinations that cannot be served by a commercial airline, a special social-services operation will be established.

Source: Cirium