Kenya Airways posts Sh513m profit after 10-year hiatus

One of the Kenya Airways Boeing Dreamliners at the Jomo Kenyatta International Airport in 2023. [Elvis Ogina, Standard]

For the first time in more than a decade, national carrier Kenya Airways has posted a profit for the first half of this year, a possible indicator that its recovery plans could be bearing fruit and is on track to fully turning around by the end of this year.

The airline reported a net profit of Sh513 million for the six months to June this year, a major improvement from the Sh21.7 billion loss reported over a similar half last year. Last year’s loss was the worst-ever performance over any half-year.

The much-improved performance has been on account of growth in revenues, which went up 22 per cent to Sh91.5 billion over half of the years, from Sh75.1 billion last year.

KQ also reduced ‘other costs’ by 97 per cent to Sh687 million over the first half of this year from Sh22.8 billion, which led to the carrier moving from deep losses into profit making.

These costs included foreign exchange losses incurred in servicing foreign currency-denominated loans at a time when the shilling had significantly weakened against the US dollar.

"The impressive performance reaffirms the operational viability of our business and underscores the effectiveness of the collective efforts by our board, management, and staff," said Kenya Airways Chairman Michael Joseph.

“This achievement underscores the strength and resilience of Kenya Airways as we move forward on our path to sustained profitability.”

The carrier has been in the red for more than a decade, having last reported a half-year profit of Sh384 million in 2013.

KQ noted that while operating costs rose by 22 per cent, which it said was due to new routes as well as increasing capacity on some of the lucrative routes that it had been servicing, overheads were reduced by 22 per cent. This, the airline said, reflected its commitment to cost management and operational efficiency.

The carrier has over the last decade been bogged down by huge debts taken when it was implementing its ambitious Project Mawinug expansion programme, which had among other goals to fly to every African capital.

More recently, it has grappled with multiple challenges, including COVID-19, that saw it ground nearly all its operations sometime in 2020 but also took time before the global travel industry rebounded. It has also had to deal with the high cost of fuel as well as a weak local currency that had hit Sh160 to the US dollar towards the end of 2023. 

The airline, which has been surviving on cash injections from the government, has been implementing a turnaround plan dubbed Project Kifaru that focuses on route rationalisation, fleet resizing, increasing employee productivity and a focus on the customer satisfaction. It is also implementing what it terms as Kifaru 2.0 which entails onboarding a strategic equity investment. 

Allan Kilavuka, chief executive officer of Kenya Airways, said the carrier has been implementing strategic priorities and he is optimistic about the airlines’ fortunes.

"Our financial results are a clear indication that our strategic initiatives are delivering the desired outcomes. We have focused on strengthening our core operations, enhancing our customer service, and exploring new avenues for growth. This performance positions us in good stead to navigate the challenges of the aviation industry and prepare for future growth,” said Allan Kilavuka, chief executive officer Kenya Airways.

Joseph said the airline remains focused on completing its capital restructuring plan to reduce financial leverage and enhance liquidity, thus ensuring a strong foundation for long-term growth and stability.

“Kenya Airways is committed to maintaining this positive momentum, building on the success of the first half of 2024 as we continue to strive for excellence in the aviation industry,” said Joseph.