KQ narrows loss to Sh22.6b as revenues near pre-Covid levels

Kenya Airways Group CEO Allan Kilavuka addressing during the hand over Boing aircraft from Kenya Airways to Mangu High School at the Kenya Airways Headquarters JKIA in Nairobi on September 20, 2023 [Boniface Okendo, Standard]

Kenya Airways (KQ) has cut its net loss to Sh22.67 billion over the year to December 2023, a 41 per cent reduction from Sh38.26 billion that it reported in 2022. 

The carrier said this was on account of ongoing recovery and turnaround initiatives that saw its revenues recover and nearly reach the levels witnessed before the Covid-19 pandemic hit the industry. 

KQ said its total revenue increased by 53 per cent to Sh178 billion from Sh116.79 billion in 2022. The revenue growth, the airline said, was attributable to a 43 per cent growth in passenger numbers against the previous year.

This, the airline noted, was only two per cent below the pre-pandemic levels.

Despite the higher revenues, the airline took a hit from the weak shilling, which dropped to a low of Sh160 against the US dollar in December last year, before making some gains in February and March this year.

The weak shilling resulted in higher operating costs, which increased from Sh167.97 billion last year to Sh122.4 billion. 

“This impressive performance was, however, dampened by Sh24 billion impact on foreign exchange losses on monetary items, loans and leases,” said KQ when it published its financial results yesterday, adding that higher passenger numbers also saw operating costs go up. 

“The Group reported a 37 per cent increment in total operating costs despite a 44 per cent increase in capacity deployed. This is mainly attributed to increased operations as the Airline bounced back from the Covid-19 impact. Fleet ownership costs went up by 10 per cent due to early lease termination costs of B777-300 as part of the turnaround strategy.”

Overheads increased by 22 per cent due to what the airline said was an increase in employee costs as well as foreign currency losses caused by the devaluation of the shilling against major world currencies, especially the US Dollar.

KQ recorded an operating profit of Sh10.5 billion in 2023 compared to an operating loss of Sh5.6 billion in the prior year, representing a 287 per cent growth. It is the first time in seven years that the carrier is profitable at the operational level. Chief Executive Allan Kilavuka  said last year’s performance was an indication that the carrier’s efforts to return to profitability are bearing fruit.

“During the year, the company’s main focus remained on improving customer experience, operational excellence, and cash conservation. These efforts resulted in the airline improving its On-Time Performance (OTP) to a high of 76 per cent from an average low of 58 per cent at the beginning of the year, ranking it as Africa’s second most efficient airline,” said Allan Kilavuka chief executive KQ.

“The company also exploited opportunities of raising 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 that the airline’s top priority would be to consolidate what he said are gains made in the airline’s turnaround strategy dubbed Project Kifaru. Mr Kilavuka also said the carrier is focusing 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 normalised levels