Why KQ is back down to earth

Kenya Airways Chief Executive Allan Kilavuka at a past event. [Wilberforce Okwiri, Standard] Kenya Airways (KQ) has slid back into loss-making, reporting a net loss of Sh12.15 billion for the half year to June 30 this year, from a profit of Sh513 million reported last year. The carrier attributed the loss to aircraft unavailability, with some of its key planes grounded. Three of the airline's Boeing 787-88 Dreamliners were not in operation during the half under review, which it said was due to global supply chain disruptions and engine availability constraints. The airline had last year emerged from years of loss-making when it posted a half-year profit of Sh513 million and went on to post a full-year net profit of Sh5.4 billion, the first time in more than a decade. "The first half of 2025 was defined by industry-wide challenges that directly impacted our performance, particularly the grounding of three of our aircraft," said Chief ExecutiveAllan Kilavuka, terming the poor performance as a temporary setback. "Aviation is cyclical, and these headwinds that we are facing are temporary and do not reflect on the fundamentals of the business. Demand for African travel is rising, and KQ is in the middle of it ... the focus is that by 2026 we will have the full fleet available." He explained that the carrier operates nine Dreamliners, and grounding three of them represented 33 per cent of the airline's wide-body fleet. One of the aircraft that had been grounded resumed service in July, and the airline expects the other two to be in operation by the end of this year. Over the half, KQ's revenues dropped 19 per cent to Sh74.5 billion from Sh91.49 billion it made over a similar half in 2024. Due to the grounding of the aircraft, the airline's operating costs declined 10.5 per cent to Sh80.74 billion from Sh90.19 billion in the first half of last year. Due to a drop in capacity, the number of passengers that the carrier ferried dropped 14 per cent. Also affected were cargo volumes, which dropped eight per cent on account of limited capacity on both the passenger aircraft and freighters. This year, KQ has also had to face angry customers who have, in recent months, complained of an increase in flight delays and cancellations, which Kilavuka attributed to the grounded planes. "We have a tight network because of grounded aircraft, and when there is a slight hitch on one, it affects the rest of the network. There are also no spare parts available to address the hitch; this has a snowball effect," he said. "We are rejigging the network to create flexibility, but there are also other factors that compound our operations. These will be fully addressed when we bring our aircraft." Kilavuka explained that due to bottlenecks in the global supply chains as well as increased demand for aviation parts following rising demand for travel, the wait for an engine to be overhauled had increased to over 120 days, noting this is a lot more than "we have seen in the past". He also decried the high costs it takes to undertake an engine overhaul at about $15 million (Sh2 billion), which the carrier is barely in a position to finance. Kilavuka also said the carrier is looking to raise at least $500 million (Sh64.5 billion) in capital from shareholders, which is expected to resolve some of the challenges that the carrier is experiencing and enable it to drive growth and profitability.

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