Kenya Airways has achieved a significant milestone by reporting its first operating profit in seven years, amounting to KSh 10.5 billion for the fiscal year ending on December 31, 2023. This marks a remarkable turnaround from the KSh 5.6 billion operating loss incurred in 2022, representing a substantial 287% increase. The operating profit margin stood at 5.9%.
The company witnessed a 30% increase in total operating costs, rising from KSh 155 billion in 2022 to KSh 201 billion in 2023. Notably, a significant portion of this increase, KSh 33.56 billion, was attributed to financing costs. The surge in financing costs was primarily driven by a KSh 24 billion loss due to foreign exchange fluctuations on the repayment of dollar-denominated loans. Other foreign-related obligations, including lease costs and monetary assets, also contributed to the escalation in finance costs.
During an investor briefing on March 26, 2024, Kenya Airways’ Managing Director and CEO, Allan Kilavuka, expressed optimism regarding the company’s trajectory, stating, “This profit is an indication that we are well on our path to recovery.” Kilavuka emphasized the commitment to achieving a full turnaround, notwithstanding the persistent bottom-line loss position, largely attributed to the foreign exchange situation. He expressed hope that the improving foreign exchange situation would favor the company’s performance in the current year.
The company’s gross profit surged from KSh 19.4 billion in 2022 to KSh 41 billion in 2023, marking a significant 112% margin growth, driven by revenue outpacing costs.
Cash generated from operations also experienced substantial growth, increasing from KSh 10.3 billion in 2022 to KSh 25.3 billion in 2023, underscoring the business’s viability. This indicates that the company is generating adequate cash to cover its operational expenses and contribute to other business activities, including investments.
Kenya Airways’ Chief Financial Officer, Hellen Mwariri, revealed, “We invested KSh 7.7 billion and financed our activities, such as loans, amounting to KSh 19.2 billion, resulting in cash and cash equivalents totaling KSh 7.8 billion at the end of the period.”
Looking ahead, Kenya Airways is focused on expansion initiatives. The airline has expanded its cargo capacity by introducing two new Boeing 737 Dash 800 freighters. Additionally, plans are underway to lease two additional Boeing 737 Dash 800 new-generation passenger aircraft by the third quarter of the current year, supplementing the existing fleet of eight aircraft. This expansion aims to support increased travel demand during peak seasons.
Furthermore, the company’s subsidiary, Jambojet, has expanded its operations by adding one aircraft last year, with intentions to incorporate another aircraft this year. Kenya Airways is also expanding its Maintenance Repair Overhaul (MRO) capabilities to accommodate third-party aircraft.
Kilavuka emphasized, “Our primary focus this year is on capitalizing the business.” Acknowledging the need for additional capital to support expansion plans, the company has initiated efforts to identify suitable partners for collaboration. Kilavuka expressed optimism that by the end of the year, positive developments regarding capitalization would be realized.
Despite ongoing restructuring efforts, Kenya Airways did not receive any financial injections or disbursements from the National Treasury in 2023, underscoring the company’s commitment to financial independence and debt restructuring.
