Kenya Airways (KQ) has ended its losing streak by posting a net profit of Sh513 million in the first half of the year to June, helped by lower debt servicing costs.
The airline last posted a profit of Sh384 million in the first half of the year to June 2013 and has been in losses since then.
The new profit reversed a net loss of Sh21.7 billion in the first half of 2023. KQ attributed the improved performance to a 97 percent drop in other expenses after the government took over its $641.4 million (Sh82.7 billion) loan as part of interventions to help the carrier transform.
The loan, which now forms part of the country’s external commercial debt, has been converted into a Kenyan shilling facility and its terms have been extended, resulting in savings for KQ from an interest and foreign exchange rate perspective.
Other costs fell to Sh687 million from Sh22.8 billion, contributing to the company’s rare profitability.
“The loan is now a Kenyan shilling facility which reduces exposure from a currency volatility perspective. This was the largest loan in our book and therefore any movement in the exchange rate had a significant impact on KQ’s finances. To support KQ in its transformation programme, the loan has been extended for a longer period to support us from a cash flow perspective,” Helen Mwaniri, KQ’s Chief Financial Officer, said on Monday.
The company also maintained a net operating profit for the period at Sh1.2 billion, compared to Sh998 million in the previous year.
This came as revenue rose to Sh91.4 billion from Sh75 billion, with operating expenses rising at a relatively slower pace to Sh90.1 billion from Sh74 billion.
Part of KQ’s lower other costs is also due to the strengthening of the Kenyan shilling during the period.
The airline’s CEO, Alan Kilavuka, says the profit booked after a decade is a testament to the airline’s efforts to turn around years of losses and operating support from taxpayers.
“We were aiming to break even in 2024 on our journey to recovery. We had already recorded an operating profit (for the full fiscal year 2023), and we were targeting our first net profit,” he said.