TOUGH TIMES

Africa's aviation sector to lose half of workforce to corona - AITA

Yesterday, it appointed APG as its Passenger Ground Service Agent, (GSA) in Europe.

In Summary
  • At least 193,300 jobs to be lost in Kenya
  • KQ urgently need $500 million to recover from corona shocks
KQ plane departs from JKIA.
KQ plane departs from JKIA.
Image: FILE

Job losses in Africa’s aviation sector could hit 3.1 million due to adverse effects of Covid-19, the International Air Transport Association (IATA) has said.

The aviation lobby said this while appealing for capital relief for the region’s airlines which are expected to incur a $6 billion loss in passenger revenue compared to the $2 billion earlier projected.

According to the lobby, Kenya’s aviation industry is expected to shed least 193,300 jobs by end of the year as are expected as 3.5 million fewer passengers will result in $0.73 billion (Sh78.8 billion) revenue loss and US$1.6 billion (Sh194 billion) in contribution to Kenya’s economy.

South Africa will be the most affected with 252,100 job likely to be shed due to an estimated revenue loss of $3.02 billion followed by Nigeria where the aviation sector is expected to incur a loss of $0.99 billion (Sh107 billion) with 152,400 jobs on line.

Over the weekend, Kenya Airways chief executive told an international news portal that the national carrier urgently requires $500 million (Sh50 billion) to recover from the coronavirus shock that has eroded its half year earnings by 50 per cent.

It recently reviewed Covid-19 loss projection to Sh70 billion or more this year after posting  Sh12.98 billion losses last year.

The CEO said the funds could be in the form of equity or a loan from the government, which is in talks to buy out minority investors if the planned nationalisation materialises.

Kilavuka added that the company is focused on cutting labour and plane-lease costs, which are its biggest fixed expenses, by $66 million (Sh7.1 billion) through the end of 2021.

The airline has already sent home some of its staff including pilots in the last few months but is in talk with unions on finding better options to cut costs without resorting to jog cuts that could affect 1,400 employees.  

 
 

For instance, the airline is set to utilise only 24 aircraft over the next two or three years, out of a current fleet of 34 passenger planes and two freighters.

Kilavuka told the portal that talks are underway with six leasing firms on swapping fixed rentals for utilisation-based terms, while other proposals include converting unneeded airliners for short-term cargo use.

‘’Recapitalisation would pare debt after the company’s liabilities increased to 218.9 billion shillings at the end of June, while providing capital for growth once markets begin to rebound,’’ Kilavuka said.

In 2017, KQ restructured $2 billion of debt as a turnaround plan after heavy losses.

The airline’s top shareholder, the Kenyan government, and 11 local lenders converted the bulk of their debts into shares, helping to relieve cash flow pressure.

As part of its assistance to the company’s revival efforts, the government also offered contingent guarantees for $750 million of the airline’s debt for 10 years.

Yesterday, it appointed APG as its Passenger Ground Service Agent, (GSA) in Europe.

Under the new agreement, APG will be providing wide-ranging sales and marketing activities for Kenya Airways as well as full customer and agent support in 39 European markets, including the Netherlands where the airline traditionally operates a daily service to Amsterdam.