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10 Years Of Flying In Massive Losses; The Story Of Kenya Airways

BY Juma · March 28, 2023 09:03 am

KEY POINTS

Costs grew from 86.4 billion shillings ($656.29 million) to 155 billion shillings ($1.18 billion), mainly driven by fuel prices, which increased by 160 percent or 26.91 billion shillings ($204.41 million). Other direct operating costs increased by 12.4 billion shillings ($94.19 million) due to increased capacity.

KEY TAKEAWAYS

In the 10 years, the airline has made a whopping 172.68 billion shillings in losses amid constant government bailouts using taxes from Kenyans. The government has since cut down on the bailouts and has been looking for buyers to purchase the shell.

Kenya Airways reported 38.26 billion shillings in losses for the financial year 2022 blaming it on accumulating debt and the high cost of fuel. This is the tenth year that the once vibrant “Pride of Africa” is registering massive and clean losses.

In the 10 years, the airline has made a whopping 172.68 billion shillings in losses amid constant government bailouts using taxes from Kenyans. The government has since cut down on the bailouts and has been looking for buyers to purchase the shell.

Last year’s net losses grew 1.4 times from 15.87 billion shillings ($120.55 million) posted in 2021 and take the national carrier’s accumulated loss to 172.68 billion shillings ($1.3 billion).

The board says the airline is on course to hit break-even point this year and profitability by 2024; something it has not done since 2012 when it closed with net earnings at 1.66 billion shillings ($12.61 million).

Related Content: Kenya Airways Reports Ksh 9.9 Billion Loss In 6 Months

Kenya Airways had seen a rise in total income from 70.22 billion shillings ($533.39 million) to 116.87 billion shillings ($887.74 million) but suffered a net loss increase majorly due to an 18 billion shillings ($136.73 million) finance cost that was passed through the income statement after the State took over the servicing of one of the dollar-denominated loans.

Costs grew from 86.4 billion shillings ($656.29 million) to 155 billion shillings ($1.18 billion), mainly driven by fuel prices, which increased by 160 percent or 26.91 billion shillings ($204.41 million). Other direct operating costs increased by 12.4 billion shillings ($94.19 million) due to increased capacity.

“Net financing cost increased by 23 billion shillings ($174.71 million) because of a one-off transaction that was taken during the year pertaining to the takeover of a US dollar-denominated loan by the Kenyan government which converted the loan to Kenyan shillings,” said Hellen Mathuka, chief financial officer at KQ.

Related Content: Kenya Airways CEO Advocates For Airline Consolidation

The massive losses come at a time Kenya Airways announced that it had finalized plans to partner with South African Airways (equally loss-making) to launch a pan-African airline group in 2024, as part of their strategic partnership.

The move aims to enhance connectivity across the continent and support economic growth through increased trade and tourism. The proposed airline group will have a combined fleet of more than 100 aircraft and will operate under a single Air Operator Certificate (AOC), making it the largest carrier in Africa.

The partnership will bring together two of the continent’s leading airlines, with a combined network that covers more than 50 destinations in Africa and beyond.

Related Content: Kenya Airways to Buy 40 Flying Taxis from Brazil

Juma is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it.(020) 528 0222 or Email: info@sokodirectory.com

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