Kenya Airways has reported its half-year performance for the half-year to June 30 amid losses at the national carrier.
KQ, as it is known by its international code, posted a Ksh8.563 billion loss for the period, a slip from Ksh4.035 billion in a similar period.
This came as total operating costs jumped 15.5 per cent to Ksh61.5 billion from Ksh53.2 billion, a move that eroded gains made in total income which increased to Ksh58.6 billion during the period.
This was up from Ksh52.2 billion income realised in a corresponding period last year.
“Some of these losses can be attributed to the return in to KQ service of two Boeing 787’s that were on sub-lease to Oman Air, investment in new routes and adoption of the new International Financial Reporting Standard (IFRS 16),” KQ chairman Michael Joseph told investors in Nairobi on Tuesday.
IFRS 16 which came into effect in January 2019, replacing IAS 17, recognises operating leases as assets in financial statements and enables comparability between companies that lease assets and those that outrightly purchase assets.
“I would like to point out that in turning around Kenya Airways, a deliberate decision was taken not to shrink the business but instead improve financial performance through strategic investments on growth opportunities. Some of these investments may deny KQ and its shareholders an immediate return but are expected to yield positive results in the future,” Joseph said.
The revenue growth was due to improved passenger, cargo and other revenue streams that were mainly driven by the positive performance of recently introduced routes.
These results include revenues from routes such as New York, Libreville, Mogadishu which were opened in the second half on 2018, management said.
As a result, the airline recorded a 6.6 per cent increase in passenger numbers to hit 2.4 million. Passenger revenue grew 5.8 per cent to Kshs. 42,597 million.
“Despite the increase in revenues, we continue to register lower yields attributed increased competitive environment, major currency fluctuations as well as a tough local macro-economic environment,” the management reported.
During the first half, the Nairobi Securities Exchange(NSE) listed airline continued its network expansion drive, opening the key strategic routes – Rome, Geneva and Malindi and increasing frequencies to other key destinations.
“The New York City Route which was launched in October 2018 has shown a positive passenger uptake,” Joseph noted.
The growth in passenger numbers is highly attributed to codeshare agreements that enable passengers to connect to other destinations in the US.
The global economic and geopolitical context remains uncertain, while Kenya Airways continues to operate in a highly competitive environment.
The carrier says it continues to invest in improvement of operations, efficient network growth and improvement of service quality and delivery.
“In the next half year, the board and management are working on a fleet refinancing programme, which once completed will improve the group’s cashflow,” Joseph noted.
The impact of this programme on the group’s financials will be announced to the public once the program is approved for implementation.