Losses widen at KQ as revenue growth stalls

Kenya Airways has widened losses for the six months to September announcing a net loss of Sh11.95 billion from Sh10.45 billion the previous period.

KQ’s revenue during the period remained flat at Sh56.72 billion (compared to last year Sh56.786 billion), the direct effects of a reduction in its fleet size.

During the period, the NSE-listed carrier’s direct operating costs reduced by 17.5 per cent to S4.8 billion even as it made fuel costs savings of Sh8 billion as a result of the lower international oil prices.

“The improvement in our gross profit from Sh1.45 billion to Sh8.78 billion was largely driven by fuel costs savings and a reduction in overhead costs,” said Alex Mbugua, the airline’s finance director.

“We also cut capacity (fleet) to reflect the reality on the ground. The business is heading in the right direction but we are not there yet a lot more has to be done.”

Foreign exchange loss

KQ made a foreign exchange loss of Sh4.8 billion compared to last year’s Sh1.2 billion loss which it attributed to the Kenyan shilling’s weakening against the US dollar.

The airline ferried 2.14 million passengers during the period (a slight increase from last year’s 2.1 million) but saw revenues from this segment remain flat at Sh48.5 billion.

Cargo volumes decreased by 2.9 per cent driven by a decline in capacity offered and further impacted by lower yields from the ban on khat exports to Europe.

READ: A close look at the role of fuel hedging in KQ’s Sh26bn loss

“Going forward, the main focus of the company will be on the business turnaround and the long-term capital raising plan,” the company said in a statement.

The airline closed the period with total assets of Sh176.04 billion, representing a 3.3 per cent drop from Sh182.06 billion posted during a similar period last year.

“The roadmap for this has been defined in consultation with key shareholders and we are in discussions on short-term financing which is required,” the airline said.