Flag carrier Kenya Airways is looking to end a decade in the red next year after narrowing its full-year loss for 2022 by seventeen percent to $43 million and a 66 percent surge in revenues to $900 million. Kenya Airways projects 2024 profit on revenue growth, cost reduction initiatives.
During an investor briefing on March 27, group chief executive Allan Kilavuka said the year’s gross earnings were just 5 percent short of the pre-pandemic 2019 and were indicative of the group’s projected recovery by 2024. Revenues were propelled by a 68 percent increase in passenger numbers to 3.7 million and a 3.5 percent growth in cargo to 65,000 tonnes.
Deployed capacity increased 75 percent to 10.3 billion Available Seat Kilometres (ASK), relative to 5.9 billion ASK in 2021. The passenger load factor rose to 74 percent, just 3.9 percent shy of the load factor achieved in 2019.
“This 2023 looks good, and we hope to continue this way. We expect that we will break even from a financial point of view by the end of this 2023, and profit level in 2024,” KQ board chair Michael Joseph told investors.
Joseph said KQ’s performance aligned with the global rise in air passenger traffic as governments lifted covid-19 travel mandates, which had rubbed off well with the airline. “In 2022, KQs operations were impacted positively by pent-up travel demand, the removal of travel restrictions, and KQs efforts to increase frequencies across its network resulting in a strong and sustained recovery in performance compared to a similar period in the prior year. As a result, passenger traffic recovered from 41.7 percent of 2019 levels in 2021 to 68.5 percent in 2022,” said Joseph.
Despite the strong revenue performance, the net loss worsened by 141 percent to $43 million, weighed down by a 59 percent spike in total operating costs. The cost increase was attributed to a sharp rise in fuel price which rose 160 percent. Higher consumption due to increased flight operations saw fuel account for 53 percent of the direct operating costs.
According to Kilavuka, the airline could have reported an operating profit this year were it not for sharp cost increases and the depreciation of the Kenya shilling against the US dollar.
“The airline recorded forex losses occasioned by the restructuring of the guaranteed Government of Kenya loans as part of the ongoing financial restructuring program, negatively impacting the income statement by Kes. 26.4 billion. If you remove the impact of the forex losses and the abnormal fuel cost increase at 160 percent, we would have made an operating profit. We are on course to turn around the business by 2024. We are confident that this will be achievable with the support we are getting from our customers, our employees, our principal shareholder, the Government of Kenya, and other stakeholders,” Kilavuka said.
The carrier’s hopes for a return to profit in 2024 are premised on several initiatives, including debt restructures, which saw a Kes18 billion finance charge from restructuring the government-guaranteed debt passed through the 2022 income statement. Plans to reduce operating costs by 10 percent by 2024 are at a 60 percent completion rate. Renegotiating aircraft leases will yield a 22 percent lease cost reduction, with the full benefits expected in 2023.
“Over the next five years, KQ will continue to diversify its revenue streams. The target is to grow the cargo business to contribute 20 percent, up from 10 percent today,” Kilavuka said.
You need to reduce your tickets like other Airlines plus give good services to the customers so that Kenyans and other people in diaspora and home can fly by our pride of África Airline. We love our airline but very expensive.