The perennial loss making national carrier, the Kenya Airways recorded a double loss of Sh21.7 billion for the half year to June 2023, down from Sh9.89 billion loss posted the previous year attributed to weakening shilling, Chief Executive Officer Allan Kilavuka said.
The poor performance, according to the airline’s top management, can be attributed to Kenya’s deteriorating shilling coupled with the cost of repaying forex dominated loans.
“We are working to resolve the issue of legacy debt in collaboration with our stakeholders and the Kenyan government. The debt is worsened by the 14 per cent devaluation of the Kenyan shilling against the dollar since January, which we have had to book as foreign exchange losses.” Kilavuka said in a statement to newsrooms.
While explaining the loss, Kilavuka said devaluation of the Kenya shilling against major currencies and the shift of the carrier’s legacy remained major concerns holding them back.
Paradoxically, the loss comes while KQ recorded an increase in revenue collection due to increased passengers which saw it grow by 56 per cent to Sh75 billion over the first half, having grown 43 per cent to Sh2.3 million.
On the other hand, the higher revenues over the same period saw the airline post an operating profit of Sh998 million from a loss of a whopping Sh5 billion last year, which the carrier says is the first in six years.
The national carrier stated that its improved performance was negated by a Sh17 billion impact on foreign exchange losses on monetary items, loans and leases.
He however assured its shareholders and customers that the management has put in place turnaround initiatives which are yielding fruit.
“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. This has, in turn, had an impact on our overhead costs, which have increased by 22 per cent.”
He continued to say that the carrier had put in place cost reduction measures such as cash conservation and lease rental renegotiations while exploiting opportunities to raise revenue through passenger charters and increased scheduled operations.
On his part, KQ Chairman Michael Joseph observed that going by the performance over the first half of this year, there are indications of recovery and that turnaround initiatives to return the carrier to profitability are bearing fruit.
