Lookouts sighted enemy planes circling about three miles off the ship's port bow at about 6,000 feet at 18:48 on 7 January 1945, near 16°N, 119°10'E. The rumble of antiaircraft fire from the cruisers and destroyers increased in crescendo; however, in a few minutes two Japanese Nakajima Ki-43 Hayabusa Army Type 1 fighter planes detached from their formation and flew toward the carriers. One of the Oscars turned at 18:57 and dived on Kitkun Bay from a relative bearing of 330°.
All available guns including Montpelier (CL-57) and Phoenix (CL-46) opened up on the Oscar and shot off parts of the plane, but the pilot continued his dive through what the ship's historian described as "murderous fire," levelled off close to the water at 3,000 yards, and crashed the suicide plane through Kitkun Bay's port side at the waterline amidships. An explosion and large fire flared up simultaneously with a hit by a 5-inch round from one of the other ships, which burst close to the carrier's bow below a gun sponson, killing and wounding several men—the attack killed 16 men altogether and wounded another 37. The Oscar tore a hole in the ship's side approximately 20 feet long and nine feet high between frames 113 and 121, extending three feet below the waterline.
Kitkun Bay lost power and began listing to port rapidly as her after engine room, machine shop, and gyro spaces flooded. The list increased to 13° with the trim down by the stern four feet at 19:04. Maintainers shifted planes to the starboard side of the flight deck to help correct the list. Firefighters valiantly battled the blaze and extinguished the flames by 19:10, but the flooding continued as seawater poured into the ship in spite of the efforts of the engineers and repair party to contain the damage. Rear Adm. Ofstie prudently ordered all secret and confidential publications destroyed to prevent them from falling into enemy hands. The Medical Department tended to the wounded, and then the captain passed the orders to transfer all "unnecessary" crewmen off the ship; wounded first. Destroyers took off 724 men, leaving less than 200 on board—the rescue party supplemented by volunteers. "We stayed upon the flight deck," Lt. Thomlinson reflected, "ready to scramble into the sea, except when we had urgent business below decks. At 19 degrees list there's no comfort on a carrier."
Despite the risk of a fire touching off ammunition and fuel on board Kitkun Bay, fleet ocean tug Chowanac (ATF-100) closed the carrier and secured a tow line to her at 20:42, and they proceeded toward Santiago Island in the vicinity of Lingayen Gulf. The engineers got steam up in the forward engine room and the damage control teams reduced the list to four degrees. Hopewell (DD-681) and Taylor (DD-468) left the formation to guide and escort Shamrock Bay (CVE-84), which operated a distance away, back into the group, and the carrier joined them during the mid watch. Ofstie then transferred his flag to Shamrock Bay.
The ship operated in the vicinity of the task group throughout 10 January, a day punctuated by two air alerts, though the enemy did not attack. Increasingly heavy seas that evening made the battered carrier's seaworthiness doubtful and maneuvering difficult. Capt. Albert Handly, the commanding officer, requested permission to join the first slow convoy to Leyte that passed in the area, and at 22:00 Kitkun Bay received a message to join some tank landing ships of TU 79.14.3 and make for that island.
Kitkun Bay held the course and station by using the magnetic compass while she limped nearly 500 miles to Leyte Gulf during the next several days. On 11 January, Lt. (j.g.) James A. Jones, USNR, of VC-91 crashed in a Wildcat (BuNo 73623) flying from the ship but a plane guard destroyer rescued him.
On 14 January, the ship launched her own CAP, and later sent the fighters on to Tacloban Airfield on Leyte. Sighting Leyte that afternoon, Kitkun Bay entered Surigao Strait at 23:36, and the following morning anchored in Leyte Gulf. Work on the ship progressed despite an enemy air raid on the night of the 18th. Smoke screens mostly obscured the Allied ships anchored in the roadstead, so the Japanese planes bombed some of the searchlights positioned on the beaches that they could spot.
Additional air alerts sent the crew to their battle stations more than once, but they placed a patch over the hole in the side and pumped the water out of the flooded compartments. Men discovered a Japanese 550-pound armor-piercing bomb wedged into the No. 3 boiler on the 20th. The deadly device had torn through Kitkun Bay and stopped there without exploding, but ordnance disposal sailors from Leyte boarded the ship and cut through the boiler to remove the bomb—while all hands stayed clear of the area. The bomb experts discovered a second unexploded 550-pounder in the previously flooded machine shop, and de-armed and jettisoned over the side both bombs, the first one at 23:06 and the second at 15:10 the following day.