Kenya Airways Profit: The excitement at Pride Centre, the head office of Kenya Airways, is clear as the JKIA runway just a stone’s throw away: after 10 years in the cooler, the national airline has reported a profit!
According to latest financials, Kenya Airways (KQ) operating profit grew 120% to Ksh998 million in the half year ending 30th June 2023, compared to Ksh5 billion during a similar period last year.
Net loss for the period however, increased from Ksh9.8 billion to Ksh21.7 billion. Management says the losses were occasioned by debt repayment and the devaluation of the Kenya shillings against major currencies.
Kenya Airways (KQ) management has attributed the improved earnings to a cabin factor of 76.1%, an increase in passenger numbers of 43%, which represents 2.3 million in headcount over the period, as well as passenger charters and ramped-up scheduled operations.
Kenya Airways Managing Director and CEO, Mr Allan Kilavuka, said the airline’s new strategy has improved its earnings. “These results confirm the operational viability of the airline. We have enhanced our customer experience at different touch points, the reliability and availability of our aircraft have significantly improved,” Mr Kilavuka said.
The profit is a stark contrast of the annual losses, with 2022, the 10th year of losses in row, returning a loss of Ksh36.2 billion from Ksh15.87 billion the previous year. The carrier had last recorded a profit in 2012, when it posted a Ksh1.66 billion net profit.
Kenya Airways has been surviving on multi-billion shilling taxpayer bailouts, with President William Ruto seeking out foreign investors to acquire it. In a trip to the United States in December 2022, he held talks with Delta Air Lines Inc, the largest US carrier by market value, over the matter.
The operating improvement was underpinned by a growth in the cabin factor to 76.1%, with an increase in passenger numbers of 43% to 2.3 million, said KQ in a statement.
Management KQ benefited from its focus on improving the customer experience, operational excellence, and cash conservation as well as exploiting opportunities to raise revenue through passenger charters and ramped up scheduled operations.
The management also undertook partnerships with other airlines, lease rental renegotiations and other cost-reduction measures which they say helped make the said profit.
In the period under review, the national carrier’s revenue expanded by 56% to Ksh75 billion in the review period. “These exceptional figures underscore the airline’s outstanding performance during the period and offer encouraging indications of ongoing recovery and turnaround initiatives that have been put in place by management to return the airline to profitability are bearing fruit,” KQ chairman Michael Joseph added.
The airline, however, faces challenges, among them debts and loans. And from the turbulence of losses and debts, Mr Kilavuka has finally found a soft landing for Kenya Airways and revived hopes among investors.
He said KQ management is working to resolve the issue of the legacy debt in collaboration with stakeholders and the Kenyan government. The debt is worsened by the 14% devaluation of the Kenyan shilling against the dollar since January, which it has had to book as foreign exchange losses.
“The devaluation of the Kenya shilling has a significant negative impact on our financials as a majority of our transactions are carried out in the major foreign currencies,” Mr Kilavuka said. “This has, in turn, an impact on our overhead costs, which have increased by 22%.”