Kenya Airways has reported a Sh4b loss after tax for the first six months of 2018.
This is an improvement from the Sh5.66bn posted in a similar period last year.
Releasing the half-year results on Wednesday, CEO Sebastian Mikosz attributed it to better usage of the fleet, more destinations, more cargo and more fleet.
Mikosz said the operating loss hit Sh1billion.
“The lowest earnings before interest and taxes margins are in Africa, despite growth in GDP, the market is not growing. This is a signal that we need to analyze how the market is evolving,” he said.
“Some of the key challenges we are experiencing are fuel prices, economic growth variation, volatile exchange rates and repatriation of funds.”
Mikosz said they carried 2.3 million passengers, achieved a cabin factor of 75.9 per cent and on time performance of 82 per cent within the last 6 months.
In 2017, Kenya Airways cut its loss after tax by 21 per cent to Sh3.8 billion as at September 30, 2017. Operational results for fiscal years 2015 and 2016 showed substantial loses. The rapid expansion of the fleet size and routs (dubbed “Project Mawingu”) was cited as the primary cause of the downturn.
Fuel price hedging and the 1996 agreement with KLM, considered intrusive in the running of the flag carrier, took secondary blame. Corrective measures needed to be taken to improve the financial and operational position of the airline and avert insolvency.
The route partnership with KLM was deemed profitable thus, kept. However, the parties agreed to amend some features of the deal that had negative effect on KQ -IATA code for Kenya Airways. Two Boeing B737-700 were sold and five newer, leased, airliners were sub-leased to improve cash flow.
Efforts to financially re-position the carrier were successful at the end of 2017. In a complex deal, stakeholders agreed to convert close to half a billion US dollars in loans to equity, changing the ownership structure.
The government of Kenya, the biggest lender, saw its holdings rise from 29.8% to 48.9% while that of KLM was diluted from 26.7% down to 7.8%. A consortium of local banks, through a special purpose vehicle called:
“KQ Lenders Company 2017 Ltd.”, ended up with 38.1%. The latter entity is obligated with a loan from the above local banks in the amount of US$225 million; this amount, in turn, is guaranteed by the government.
