Kenya Airways Soars to Profitability with Ksh 10.5 Billion Operating Profit in 2023

Wednesday, March 27, 2024

Kenya Airways has seen a notable rebound in its financial performance, culminating in an operating profit of Ksh 10.5 billion for the year ending December 31, 2023. This marks a substantial turnaround from an operating loss of Ksh 5.6 billion the previous year, reflecting a growth of 287%. The airline’s total revenue surged by 53% to reach Ksh 178 billion. This revenue boost is largely credited to a 43% increase in the number of passengers compared to the previous year, bringing the airline’s passenger volumes to just 2% shy of pre-pandemic levels, a significant achievement.

Key Financial Highlights:

• A striking 287% increase in operating profit to Ksh 10.5 billion from a loss of Ksh 5.6 billion in the preceding year.
• A 53% rise in the Group’s total revenue to Ksh 178 billion.
• A 53% increase in turnover, driven by an uptick in passenger numbers and expanded capacity.
• The Group’s total operating costs went up by 37%, despite a 44% increase in capacity, mainly due to the ramp-up in operations as the airline recovered from the pandemic’s impacts.
• Direct operating costs rose by 48%, in line with the increased capacity.
• Fleet costs decreased by 47.5%, thanks to strategic fleet rationalization.
• Overhead costs grew by 22%, attributed to higher employee costs and foreign currency losses due to the devaluation of the Kenya Shilling against major currencies, notably the US Dollar.
• The loss after tax was reduced by 41% to Ksh 23 billion from Ksh 38 billion, showing progress towards financial stabilization.

Speaking at an investor briefing event, Kenya Airways Chairman, Michael Joseph said, “These figures highlight the airline’s remarkable performance over the year and provide encouraging signs of continued recovery within the air transportation sector. They also confirm the operational viability of the airline business and demonstrate that the management’s ongoing efforts to restore profitability are yielding positive results.” 

Kenya Airways Group Managing Director and CEO, Allan Kilavuka, said, “During the year, the company’s main focus remained on improving customer experience, operational excellence, and cash conservation. These efforts resulted in the airline improving its On-Time Performance (OTP) to a high of 76% from an average low of 58% at the beginning of the year, ranking it as Africa’s second most efficient airline. Additionally, the introduction of the Asante rewards loyalty program and the revamp of KQ’s website aimed to better appreciate and reward customer loyalty while improving user-friendliness and functionality.” 

He added: “The company also exploited opportunities of raising the much-needed revenues by ramping up its scheduled operations as well as through passenger charters. Other initiatives undertaken by the management included partnerships with other airlines and cost containment measures.” 

Despite encountering foreign exchange losses of Ksh 24 billion due to monetary items, loans, and leases, the company’s performance this year has been a significant step forward in its turnaround strategy. It achieved a remarkable recovery, reducing its loss before tax to Ksh 22.7 billion from the previous year’s loss of Ksh 38.3 billion in 2022.

Mr. Kilavuka emphasized that the airline’s top priority going forward, is to continue building on the gains made in the airline’s turnaround strategy, Project Kifaru. Along with this, in the near term, he said the focus is on completing the capital restructuring plan whose main objectives are to reduce the Company’s financial leverage and increase liquidity to ensure the company can operate at normalized levels.  

“Our primary focus going ahead is dedicating ourselves to fostering innovation, nurturing partnerships, and cultivating a culture of excellence to ensure that Kenya Airways soars to new heights of success. Additionally, we will continue to engage government on recapitalizing the business to place Kenya Airways on a stronger footing and provide a stable base for long-term growth,” said Mr Kilavuka. 

The Kenyan Government, as a principal investor in Kenya Airways, has expressed steadfast backing for the airline’s efforts to enhance its operations and financial framework. They are actively participating in the transaction process and plan to maintain their significant stake in the airline for the foreseeable future.

The International Air Transport Association (IATA) forecasts that the aviation industry will completely recover from the impacts of the Covid-19 crisis by 2024. This anticipated growth marks a significant resurgence for airlines, indicating a revitalized strength and dynamism within the sector.

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