KQ loss widens to Sh21.7b due to forex, loan costs

Kenya Airways planes at the JKIA, Nairobi, on November 6, 2022. [Denish Ochieng, Standard]

Kenya Airways (KQ) has reported a Sh21.7 billion net loss for the half year to June 2023 compared to a Sh9.89 billion loss the carrier posted last year.

KQ said the loss was due to a weak shilling that resulted in high foreign exchange losses as well as increase in the cost of repaying foreign currency-denominated loans.

The loss was despite higher revenues, which grew 56 per cent to Sh75 billion over the first half on account of increased passengers, which grew 43 per cent to 2.3 million.

Higher revenues over the half year, KQ said, saw it post an operating profit of Sh998 million – the first in six years – from a loss of Sh5 billion last year.

The airline said its improved performance was negated by a Sh17 billion impact on foreign exchange losses on monetary items, loans and leases. Chief Executive Allan Kilavuka said the carrier’s legacy debt and devaluation of the shilling against major currencies were the two concerns that continued to hold them back. 

“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,” he said in a statement yesterday.

“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.”

Mr Kilavuka added 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.

KQ Chairman Michael Joseph said 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.

Meanwhile, Mr Kilavuka said they would implement further turnaround initiatives. 

“Our focus looking ahead is on recapitalising the business to place Kenya Airways on a stronger footing and provide a stable base for long-term growth. We will continue focusing on our network expansion and fleet optimisation to increase passenger and cargo capacities,” said Kilavuka.