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Kenya Airways records an operating profit of Sh10.5 billion in full year results

Kenya Airways’ ongoing recovery and turnaround initiatives have resulted in the airline recording an operating profit of Sh10.5 billion for the year ended December 31, 2023 compared to an operating loss of Sh 5.6 billion in the previous year, representing a 287 percent growth.

The Group’s total revenue increased by 53 percent to close at Sh178 billion which is mainly attributable to a 43 percent growth in passenger numbers against the previous year and to only 2 percent below the pre-pandemic levels which is quite a commendable achievement.

The Group also reported a 37 percent increment in total operating costs despite a 44 percent increase in capacity deployed which is mainly attributed to increased operations as the Airline bounced back from the Covid-19 impact.

Further, direct operating costs increased by 48 percent in line with the increase in capacity as fleet costs were lower by 47.5 percent due to fleet rationalization.

Overheads increased by 22 percent due increase in employee costs as well as foreign currency losses caused by devaluation of the Kenya Shilling against major world currencies, especially the US Dollar.

Citing the loss after tax that reduced by 41 percent to Sh23 billion from Sh38 billion, Kenya Airways Chairman, Michael Joseph said that these figures highlight the airline’s remarkable performance over the year and provide encouraging signs of continued recovery within the air transportation sector.

According to the Chairman, the figures also confirm the operational viability of the airline business and demonstrate that the management’s ongoing efforts to restore profitability are yielding positive results.

Also speaking at the investor briefing event in Nairobi on Tuesday, Kenya Airways Group Managing Director (MD) and CEO, Allan Kilavuka revealed that during the year, the company’s main focus remained on improving customer experience, operational excellence, and cash conservation.

Kilavuka noted that these efforts resulted in the airline improving its On-Time Performance (OTP) to a high of 76 percent from an average low of 58 percent at the beginning of the year, ranking it as Africa’s second most efficient airline.

Additionally, the CEO disclosed the introduction of the Asante rewards loyalty program and the revamp of KQ’s website, aimed to better appreciate and reward customer loyalty while improving user-friendliness and functionality.

“The Company also exploited opportunities of raising the much-needed revenues by ramping up its scheduled operations as well as through passenger charters. Other initiatives undertaken by the management included partnerships with other airlines and cost containment measures,” he added.

Despite facing Sh19 billion in foreign exchange losses on monetary items, loans, and leases, the Group’s MD observed that this year’s performance marked a major milestone in the Group’s turnaround strategy.

He reiterated that the Company managed to achieve a notable improvement, with a loss before tax of Sh 22.7 billion, marking a significant stride from the Sh 38.3 billion loss reported in the previous financial year of 2022.

Kilavuka emphasized that the airline’s top priority going forward, is to continue building on the gains made in the airline’s turnaround strategy, Project Kifaru and along with this, in the near term, the focus is on completing the capital restructuring plan whose main objectives are to reduce the Company’s financial leverage and increase liquidity to ensure the company can operate at normalized levels.

“Our primary focus going ahead is dedicating ourselves to fostering innovation, nurturing partnerships, and cultivating a culture of excellence to ensure that Kenya Airways soars to new heights of success. Additionally, we will continue to engage the government on recapitalizing the business to place Kenya Airways on a stronger footing and provide a stable base for long-term growth,” stated Kilavuka.

Meanwhile, the Government of Kenya in its capacity as a major investor in Kenya Airways has indicated its continued strong support for the Company’s operational and capital structure optimization process and is closely involved throughout the transaction process and intends to remain a major stakeholder in the Company over the long term.

the International Air Transport Association (IATA) predicts a full recovery of the aviation industry from the Covid-19 crisis in 2024. This projected growth signifies a substantial rebound and resurgence for airlines, reflecting a renewed vigor and vitality within the industry.

By Michael Omondi

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