National carrier Kenya Airways’ #ticker:KQ shareholder value has moved into positive territory riding on last year’s balance sheet restructuring that reduced its annual debt payment obligations, leaving room to revamp its operations.
KQ’s equity position stood at Sh417 million in the nine months between April and December 2017 compared to negative Sh45 billion in the year to March 2017, according to a financial report that was released on Wednesday.
The change in fortunes follows a complex restructuring of the business that saw Kenya Airways main creditors -- 10 commercial banks and the government – convert Sh44.2 billion loans into equity to save it from total collapse.
Financial results that were released on Wednesday, however, show that Kenya Airways is still a multi-billion shilling loss-making operation that produced a Sh6.08 billion loss for the nine months to December 2017.
The results do not have a comparable period because KQ has changed its reporting period from March to the calendar year.
Michael Joseph, who chairs the company’s board, said the change in reporting cycle has been done to sync the airline’s books with those of stakeholders such as travel agents, financiers and lessors.
“We are now concentrated on the industrial restructuring of the business, which includes finding ways of increasing our revenues and keeping costs at a manageable level,” he said.
KQ’s precarious equity position – that left it with less assets than its debt load -- meant that if it were to be liquidated, shareholders would be left with nothing.
Kenya Airways’ total debt now stands at Sh139.6 billion compared to total assets of Sh140.1 billion.
The airline made loan repayments of Sh9.1 billion during the period under review, a significant drop from the Sh25 billion paid out in the full year to March 2017.
Despite this improvement in its leverage, the carrier posted a loss for the nine months to December mainly driven by a 14 per cent increase in fuel costs and a 20 per cent drop in customer numbers.
KQ airlifted 3.4 million passengers during the nine months to December earning Sh80.8 billion in revenues but its operating costs consumed Sh79.5 billion.
Sebastian Mikosz, the airline’s chief executive, said attention is now turning to route expansion, cost optimisation and improvement of service delivery. Top on the to-do list are the direct and daily New York flights set to commence in October and which Mr Mikosz expects to boost KQ’s revenues by between eight and 10 per cent.