Kenya Airways the national carrier of Kenya, has showcased a remarkable rejuvenation by reporting a substantial 120% increase in its operating profit for the fiscal year 2023. This resurgence comes on the heels of a challenging period, with the...
Kenya Airways the national carrier of Kenya, has showcased a remarkable rejuvenation by reporting a substantial 120% increase in its operating profit for the fiscal year 2023. This resurgence comes on the heels of a challenging period, with the airline having recorded a loss of Kshs 5 billion (34 Million USD) in 2022. The latest financial figures, announced during the 2023 Half Year results briefing, reveal that the airline has shifted its trajectory toward profitability, posting an operating profit of Kshs 998 million.
This achievement was underpinned by a series of strategic initiatives aimed at enhancing the overall customer experience, achieving operational excellence, and ensuring prudent cash management. By capitalizing on opportunities in passenger charters and intensifying scheduled operations, Kenya Airways effectively navigated the turbulent aviation landscape.
One of the key contributors to this impressive recovery is the noteworthy growth in the cabin factor, which soared to 76.1%. This was complemented by a substantial 43% surge in passenger numbers, amounting to 2.3 million. Additionally, the Group’s revenue witnessed a remarkable upswing, reaching Kshs 75 billion—a substantial 56% increase compared to the same period the previous year.
The airline’s leadership attributes these accomplishments to a combination of factors, including strategic partnerships with other airlines, the renegotiation of lease rentals, and comprehensive cost-reduction measures. The concerted efforts of management seem to have paid off as Kenya Airways navigated the tumultuous conditions of the aviation industry.
During an investor briefing event, Kenya Airways Chairman Michael Joseph expressed his optimism, stating, “These exceptional figures underscore the airline’s outstanding performance during the period and offer encouraging indications that ongoing recovery and turnaround initiatives are bearing fruit.”
Allan Kilavuka, Kenya Airways Group Managing Director and CEO, emphasized the airline’s progress in multiple domains. “We have enhanced our customer experience at different touchpoints, significantly improved the reliability and availability of our aircraft, and elevated our On-Time Performance (OTP) from a low 58% at the beginning of the year to 77% by the end of June, with a target to exceed 80%.”
Despite these triumphs, Kenya Airways faced headwinds in the form of foreign exchange losses, amounting to Ksh 17 billion on monetary items, loans, and leases. Consequently, the airline reported a loss before tax of Kshs 22 billion. The impact of legacy debt and the devaluation of the Kenyan shilling against major currencies loomed large, impeding the airline’s overall performance.
In response to these challenges, Allan Kilavuka stated, “We are actively collaborating with our stakeholders and the Kenyan government to address the legacy debt issue. The devaluation of the Kenyan shilling, which has depreciated by 14% against the dollar since January, exacerbates our financial situation due to the majority of our transactions being conducted in foreign currencies. This has consequently driven up our overhead costs by 22%.”
Looking toward the future, the International Air Transport Association (IATA) predicts a positive trajectory for the aviation industry. Kenya Airways aims to continue its momentum by implementing turnaround strategies and reinforcing its position in the market.
The CEO outlined the airline’s outlook, saying, “Our focus moving forward is on recapitalizing the business to establish Kenya Airways on a solid foundation, ensuring long-term growth. We remain committed to expanding our network and optimizing our fleet to accommodate increased passenger and cargo capacities. Encouragingly, forward bookings for the second half of the year show a promising trend, beginning with a robust summer peak, particularly in July and August, where our load factors are surpassing those of the previous year.”