The Kenya Airways has cut its losses by half, reporting a loss before tax of Sh15.88 billion for the year ending December 2021, from Sh36.22 billion in 2020.
Allan Kilavuka, the Chief Executive Officer of KQ, attributes the improved results to cost-saving in 2021 after it renegotiated terms of lease of aircraft that saw KQ pay lower lease fees.
There was also increased revenues as the airline resumed more flights last year following the re-opening of different economies, and in turn more people travelling.
Revenues for the airline increased to Sh70.2 billion in 2021, up from Sh50 billion.
The revenues are, however, shy of the pre-Covid-19 levels, where the airline reported Sh128 billion in the year ending December 2019.
“We negotiated with some of the aircraft lessors, and this resulted in significant savings in terms of the aircraft rentals, converting what has been a fixed cost into a variable cost,” said Kilavuka.
“We have entered into fresh round of discussions with the lessors to make the savings permanent,” said the CEO at an investor briefing on Tuesday, March 29.
Kilavuka further said the pay-per-use on some of the planes had resulted in the carrier making fleet savings of up to Sh11.6 billion.
He, however, expressed concern about the high fuel costs, saying the spike in crude oil prices could erode some of the gains made by KQ.
“The price of fuel has increased 100 per cent, compared to where it was a year ago. That is very concerning to us because fuel accounts for about 25 per cent of our costs. The projects that we may have had earlier, are taking a beating, and we may not have as good results as we may have anticipated earlier,” he said.