Brand In Focus: The Truth On Kenya Airways Performance

Kenya Airways, commonly known as KQ has been the biggest Kenya’s flag carrier since 1977. This was after the dissolution of East African Airways in the same year.

Kenya Airways was wholly owned by the Government of Kenya until 1995, it was then privatized in the year 1996 making it the first African airline to be privatized.

The airline is currently a public-private partnership with the largest shareholder being the Government of Kenya with more than 29 percent shares followed by KLM with more than 26 percent of the shares with the rest of the shares being left for private owners.

Financial Woes

Kenya Airways was doing well. It was actually the pride of Africa, connecting Kenya to the world and the world to Africa. Trouble begun when the airline began registering a series of losses with the biggest loss ever being that of 29.7 billion shillings registered in the 2014-2015 fiscal year. This was termed as the “worst loss in history.”

In November 2015, the management announced a further loss of 11.9 billion shillings for the half year ending the month of September. This was a bit higher than the 10.4 billion shillings net loss recorded at the same time the previous year.

But the airline has been strong, still struggling but steadily reducing the loss gab and according to the management, the airline is expected to be back in the profit making zone in the next 6-12 months.

Profit/Loss Performance Since 2010

From the image above, Kenya airways made profits from 2010 to 2013 and then went into losses in 2014 and 2015.

On 21^st July, the airline reaffirmed its progress towards full recovery after it recorded a 75 percent reduction in operating loss from 16.3 billion shillings to 4.1 billion shillings for the year ending 31^st March 2016.

The operating loss improvement of 12.2 billion shillings was underpinned by the growth in cabin factor to 68.3 percent with an increase in passenger numbers from 4.28 million to 4.23 million.

READ: Kenya Airways Reduces Operating Loss by 75 percent in FY 2015/2016 in Turnaround Strategy 

Performance on the Stock Market

Kenya Airways has not been performing badly at the Nairobi Security Exchange. On several occasions, the company has been featuring among the top gainers of the day at the NSE and at sometimes giving the most traded in shares of the day.

READ: Kenya Airways Among Top Gainers of The Day at The NSE

The line graph below shows the average share price of Kenya Airways since January 2016 to September 2016:

Why Think of Investing in Kenya Airways

Kenya Airways is a company that has been into existence form many decades, since 1977. The likelihood of it going down is minimal. This is like the pride of Kenya, the pride of Africa and no one is going to leave it to lie in shambles. The airline has embarked on a recovery program and soon it will go back to the profit-making zone.

“The quality of our losses will reduce significantly. Our quality of results is improving. We will come back to profitability in 8 to 12 months,”  said the Chief Executive Officer, Mbuvi Ngunze.

READ: 60 percent of Kenya Airways Revenue Comes from Africa