The national flag carrier of Kenya, Kenya Airways PLC has continued its positive recovery progress after the Skyteam carrier recorded its first operating profit in six years.
The airline has gravitated from a loss of Ksh5 billion shillings in 2022 to Ksh998 million in profit in 2023.
Kenya Airways: Successful Half Year
The airline reported a growth in revenue of 75 billion Kenyan shillings recording a 56% increase compared to the same period in 2022.
Kenya Airways is able to hit the number due to its growth in cabin factor to 76.1% with an increase in passenger figures of 43% to 2.3 million.
In the first half, the Kenyan flag carrier targeted improving customer service, seamless operational excellence, and conservative management of funds.
Other Revenue Streams
To improve cash flow, the airline also delved into business opportunities, including passenger charters, and ramped up scheduled operations, due to the increase in demand.
Kenya Airways also took precautions, such as spending control, lease rental renegotiations, and other cost-reduction actions.
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Kenya Airways Chairman Michael Joseph stated at an investor briefing conference: “These exceptional figures underscore the airline’s outstanding performance during the period.”
“They offer encouraging indications of ongoing recovery and turnaround initiatives that have been put in place by management to return the airline to profitability are bearing fruit.”
Kenya Airways Group Managing Director and CEO, Allan Kilavuka also confirmed the general positivity; also noting the operational performance improvement: “These results confirm the operational viability of the airline.”
“We have enhanced our customer experience at different touchpoints, the reliability and availability of our aircraft have significantly improved, and our On-Time Performance (OTP) has gone up from a low 58% at the start of the year to 77% at the end of June with a target of being above 80%.”
Foreign Currency Plays a Role
Kenya’s airline’s improved performance was boosted by a 17 billion impact on foreign exchange losses on monetary items, loans, and leases, giving rise to a loss before tax of Kshs 22 billion.
Allan Kilavuka stated that the accumulated debt and the devaluation of the Kenyan currency against major currencies are the reasons why it held the Kenyan airline back. He commented:
”We are working to resolve the issue of the legacy debt in collaboration with our stakeholders and the Kenyan government.”
“The debt is worsened by the 14% devaluation of the Kenyan shilling against the dollar since January, which we have had to book as foreign exchange losses.”
“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, an impact on our overhead costs, which have increased by 22%,” said Mr Kilavuka.
Banking on Future Growth
Like any other airline, Kenya Airlines looked at IATA’s May 2023 polling data, which kept them bullish and optimistic on route expansion.
Mr Kilavuka later stated: “ Our focus looking ahead is on recapitalizing 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 optimization to increase passenger and cargo capacities.”
“Further, we see a promising trend in forward bookings for the year’s second half. It all starts with a robust summer peak, particularly in July and August, where our load factors exceed last year’s.”
Finally, Kenya Airways is rising from the dismay of mismanagement and cost overrun. Will Kenyan Airways be on par with Ethiopian Airlines? Time will tell.
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