Kenya Airways Ltd is optimistic with its ‘Operation Pride’ after bridging its pretax loss by 12.2 percent to 26.1 billion shillings ($257 million) in the year to end-March according to the CEO Mbuvi Ngunze on Thursday.
“If you exclude the entire one offs, delays, the sale of the London slot, we actually have broken even. This reflects significantly of the gains that the carrier has achieved,” he said confidently.
“This is a big structural change. We are not yet satisfied, but it is only the beginning,” he added.
The carrier, which is part-owned by Air France KLM, has been reducing its fleet – selling off an and leasing -, selling land and cutting jobs to recover from losses as part of its turnaround strategy.
Operation Pride’s main planks are: closing the profitability gap, refocusing the business model as well as optimizing the capital of the company. This is aimed generating more revenue and cost side improvements to improve its liquidity.
“Our liquidity has improved by Ksh4.8 Billion by end of March 2016 compared to a similar period in March 2015.”
Dick Murianki, the Finance director said the airline has reduced its operating loss by 75 percent. Gross profit rose 42 percent and the operating loss shrank from 16.3 billion to 4.1 billion shillings.
“We have taxied and we are aligned for take-off,” he told an investor briefing in Nairobi.
“We have been through a very tough year, but we are still growing even in difficult times. We are still operating, and confidently so, even with results that are losses,” according to Ngunze.
Ngunze further reiterated that where they have leased their fleets especially in countries like Turkey currently facing political upheavals, “They have no immediate concerns.”
However, with a revised network they carrier intends to improve connectivity and ability to sell flights to more destinations within it.
“Africa is where our growth is going to happen. We are currently generating 60 percent of our revenue from it by densifying our African presence through increased frequencies.”
He said the main risk facing the carrier was uncertainty around Kenya’s presidential election, set for August 2017, currency depreciation hitting Africa hard, global commodity prices, global terrorism, currency repatriation and fuel price.
However, opportunities lie in Sub-Saharan Africa Economic growth, increased tourist arrivals in Kenya, positive security situations, stakeholder support and the broader African Union vision.
“The business context is different. We have to be alive to the changes around it. It is a marathon and not a relay to grow and we are focused to the future with confidence. We want to run a different race that is specific to our operating environment,” said Ngunze.