Kenya Airways narrowed its net loss by 40.6 percent to Sh22.6 billion in the year ended December, helped by a surge in revenues.
The company had made a net loss of Sh38.2 billion the year before. Kenya Airways grew its sales 52.8 percent to Sh178.4 billion as it rebuilt its route network and capacity from the depths of the Covid-19 pandemic that disrupted the global aviation sector.
KQ, as the carrier is known by its international code, recorded an improvement in operational results which were however wiped out by losses on foreign exchange and early lease terminations.
The airline posted an operating profit of Sh10.5 billion, reversing an operating loss of Sh5.6 billion a year earlier.
This reflected the faster growth in revenue compared to operating costs which increased 37.2 percent to Sh167.9 billion.
The company, however, plunged into a net loss due to the additional costs linked to borrowing, foreign exchange movements and lease terminations among others. These costs increased to Sh33.5 billion from Sh32.8 billion.
“This impressive performance was however dampened by Sh24 billion impact on foreign exchange losses on monetary items, loans and leases,” KQ said in a statement.
The company’s shares remain suspended on the Nairobi Securities Exchange (NSE) where they last traded at Sh3.83 on July 2, 2020.
KQ has been increasing its capacity steadily following the resumption of global travel after the Covid-19 pandemic receded, resuming flights to abandoned destinations and increasing frequencies on others.
It has also signed more code share agreements with other carriers where they market and sell each other’s tickets.
“The airline offered to the market a capacity of 14,804 million measured in Available Seat Kilometres (ASKs) up from 10,302 million offered in the prior year,” the company said in a statement.
“This represents 88 percent of the capacity deployed in the pre-pandemic period. The uptake of this capacity measured in Revenue Passenger Kilometres (RPKs) improved by 51 percent.”
ASK measures an airline’s capacity to generate revenue, capturing the available seats and the distance flown.
RPK shows the distance travelled by paying customers, indicating demand for air travel over the period.
The company’s current liabilities exceeded its short term assets by Sh72.6 billion in the review period, underlining the liquidity crisis that has persisted for years amid the losses.
The national carrier says it expects to benefit further from the projected full recovery of the aviation sector this year from the impact of the pandemic, according to estimates from the International Air Transport Association (IATA).
“Going forward, Kenya Airways Group will continue building on the gains made in the airline’s turnaround strategy, Project Kifaru,” the company said.
“Along with this, in the near term, the focus is on completing the capital restructuring plan whose main objectives are to reduce the group’s financial leverage and increase liquidity to ensure the company can operate at normalised levels.”
The airline says the government has indicated its continued strong support for the company’s operational and capital structure optimization process.
KQ added that the National Treasury, with a 48.9 percent stake in the airline, is closely involved throughout the transaction process and intends to remain a major shareholder in the company over the long term.
The government has helped KQ fund its operations and pay some of its debt as the carrier seeks to bring in a strategic investor.
The airline’s short and long term liabilities increased in the review period, leaving it with a larger negative equity of Sh136.1 billion. This was up from a negative book value of Sh108 billion in the prior year.
