For the first time in seven years, Kenya Airways has reported an operating profit of KSh 10.5 billion in the year ended December 31 2023, a 287% increase from the KSh 5.6 billion operating loss in 2022. This is a margin of 5.9%.
Total operating costs increased by 30% from KSh 155 billion in 2022 to KSh 201 billion in 2023, with KSh 33.56 billion related to financing cost. The financing cost was largely driven by a KSh 24 billion FX losses on repayment of dollar-denominated loans. Other foreign-related obligations, such as lease costs and monetary assets also contributed to the rise in finance costs.
“This profit is an indication that we are well on our path to recovery. We have made a commitment that we will do our best and turn around fully this year, even though we still have a bottom line loss position, primarily because of the FX situation. Now that the FX situation is improving, we hope that will work in our favour this year,” said KQ MD and CEO Allan Kilavuka during an investor briefing on March 26 2024.
Gross profit grew from KSh 19.4 billion in 2022 to KSh 41 billion in 2023, which is a 112% margin on the back of revenues that grew faster than costs.
Cash generated from operations grew from KSh 10.3 billion in 2022 to KSh 25.3 billion in 2023, highlighting the viability of the business. This means the business is generating sufficient cash to cover its own operations and contributing towards other activities of the business, including investing.
“We invested KSh 7.7 billion and financed our activities, i.e loans and the like at KSh 19.2 billion, resulting in a cash and cash equivalent at the end of the period of KSh 7.8 billion,” says Kenya Airways CFO Hellen Mwariri.
On matters expansion, Kenya Airways has added some capacity on cargo – two new Boeing 737 Dash 800 freighters.
MD and CEO Allan Kilavuka says the airline is on course to lease two additional Boeing 737 Dash 800 new generation passenger aircraft by Q3 this year, to add to an already existing eight in the fleet. This will go a long way in supporting the high travel season.
Further, KQ’s subsidiary, Jambojet has also expanded, having added one aircraft last year, with plans for another one this year.
Allan Kilavuka says they are also expanding their Maintenance Repair Overhaul (MRO) so they can bring third party aircraft to use the facility.
“Our biggest focus this year is capitalization of the business.For our expansion, we need more capital, and we have started the process of identifying suitable partners that will support these efforts, and we believe by the end of this year, we will have good news to report.”
On an even brighter side, Kenya Airways did not get any financial injection or disbursements from National Treasury in 2023, even though they continue to be supported in restructuring their debts.