KQ to return to profit in 2024 – CEO
Kenya Airways is targeting to be profitable and issue dividends by 2024 in one of the most ambitious announcements by Chief executive officer Allan Kilavuka.
The CEO of the struggling and loss-making national carrier said the airline has been reducing its losses and is hopeful the company will issue dividends in two years’ time.
“It is true that we need to be more efficient and we need to provide something back to the shareholders and we think we will be able to do that by 2024 for sure,” Kilavuka said. The company will cut its costs through restructuring which could lead to loss of manpower in order to turn a profit.
Foreign exchange
“If you look at our results from 2020 to 2021 and half year 2022 you can see a progressive improvement. In fact, in the next 12 months we have accelerated a programme of restructuring that will accelerate that even further,” he said.
The company booked a half year loss of Sh5.3 billion on hedged foreign exchange differences. Jet fuel, which was the largest contributor of overheads in the half-year period, pushed overall operating expenses to Sh53. 1 billion from Sh34 billion.
In an effort to stabilise its performance, the carrier, popularly known as KQ, has further decreased its fleet by two aircraft. According to the most recent statistics, the carrier’s fleet size decreased in the past nine months from 43 to 41 aircraft, as of December 31, 2021, as two leased Embraer 190 aircraft were turned in when their leases expired.
Of the 41 aircraft, 23 are leased and 18 are owned or funded by the airline itself.
In response to a multi-million shilling rescue proposal where the ailing airline is obliged to decrease its network, run a smaller fleet, and perhaps slash its employees, the Kenyan government is pressing for an airline restructuring.
Total sales for the group reached Sh48.1 billion, a 76 per cent increase over the same time in 2017. This rise is mostly attributable to a notable increase in passenger revenue by 109 per cent and cargo revenue was 18 per cent.
Pent-up demand and the lifting of travel restrictions had a beneficial influence on operations throughout the first half of 2022, which led to a substantial and consistent improvement in trade performance compared to a comparable time in the previous year.
KQ transported 1.61 million people in total over the time frame, an increase of 85 per cent over the 0.87 million passengers carried during the same period the previous year.
However, this is still 33 per cent below the pre-pandemic level for 2019.
KQ chairman Michael Joseph said although global border openness has caused several important markets to recover quickly, the recovery has been hampered in several areas by persistent travel restrictions.
“It is also significant to highlight that the high cost of aviation fuel, which is nearly 65 per cent more than last year, has an additional negative impact on these outcomes,” he said.
The operational profit for the time period, Joseph added, would have been Sh1.5 billion if the jump in gasoline prices had been taken into account.
The International Air Transport Association is convinced that, despite continued uncertainty, the number of passengers carried by all airlines worldwide will reach 83 percent of pre-pandemic levels in 2022.
