KQ Woes Continue As Airline Trades Below 1 shilling at NSE

The loss-making Kenya Airways recorded a drop in share price at the Nairobi Security Exchange on Wednesday, April 23, 2020, as the airlines traded at 0.97 shillings.

With the drop in share price, KQ recorded 5.57 billion shillings in market capitalization. This was a 31million shilling drop (6.5 percent) as compared to the 5.9 billion shillings it had recorded the previous day.

The drop in share price is attributed to the financial woes the Airline has been facing in recent years which has been worsened by the travel restrictions issued to tame the spread of Coronavirus globally.

Experts say further losses are expected this year as investors continue to sell their stocks.

According to Sarah Wanga, AIB Capital head of research opines that “globally, several airlines are struggling. KQ revenues are expected to drop and hence investors are selling stocks. Losses are also expected to be very high this year.”

Wanga says most investors are currently waiting on a clear indication of the nationalization plan.

The Coronavirus has had a great impact on the airline industry with planes being grounded following travel restrictions by various countries. Most Airlines have now resorted to cargo business to at least generate some revenue.

Since there are still no signs of lifting the travel restrictions, Airlines have been forced to convert some of their passenger planes to Cargo planes for revenue.

The case has been the same with KQ after its passenger planes were grounded for the first time in 40 years due to the Coronavirus pandemic.

However, the National carrier was not destined to make a profit in 2020 as the Government signed a clandestine cargo deal with Ethiopian Airlines, leaving KQ out to struggle on its own.

To add salt to the already opened wound, Over 300 KQ staff were taken to mandatory quarantine following a directive by the Ministry of Health issued to all foreign travelers.KQ was spending 80 million shillings to carter for the quarantined crew.

However, the Airlines expect that the Government will come to its rescue during this tough time with the airline CEO saying they have already sent a request for additional funding to the Ministry of Transport and the National Treasury.

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