Investment

How Kenya Airways Found Its Positive Altitude In FY2024

BY Soko Directory Team · May 19, 2025 10:05 am

Mary Mwenga, acting CFO of Kenya Airways, sat down with me to discuss the carrier’s FY2024 financials. Our conversation unfolded a tale of steady recovery, tactical discipline, and ambitious vision — an airline that is firming up its wings after a turbulent decade. The numbers weren’t merely getting better; they were skyrocketing. Kenya Airways’ revenue growth in FY2024 was driven by a significant increase in international passenger traffic, up sharply across Africa, Europe, and Asia. Fueled by pent-up post-pandemic demand and shrewd route management, KQ didn’t just pack the plane—it packed it at elevated yields.

Mary credits this increase to a restructured network strategy and enhanced maximization of aircraft, the latter noting that “unit revenue up nicely, underpinned by higher load factors and a premium product offer appealing to long-haul travelers.” But as with any balance sheet, the devil lies in the details.

When asked how much of the profits were relevant profits, Mary was specific: “About 70% of our profits this year derived from core operations. “The vast majority of the spike in EBITDA was on the back of material margin improvements across our passenger and cargo business, with the rest buoyed by savvy asset disposals and positive FX adjustments.” This is a far cry from past years when non-operational income hid structural deficiencies.

Trade Smarter, Grow Faster with Kingdom Bank Trade Finance

Kenya Airways’ debt-to-equity ratio — a closely watched measure — has also moved in the favorable direction. “We’ve reduced it to 4.8 from 6.1 the previous year,” Mary said, attributing this to the new debt restructuring deals they had struck and better equity positions bolstered by retained earnings.

But while still high by global standards, the downward trajectory is a sign of growing financial discipline. “It’s about rebuilding investor trust, one quarter at a time.” Among the clearest highlights in FY2024 was KQ’s EBITDA margin that climbed to 15.4%, compared to 9.2% the previous year.

This increase is the result of tighter cost management, improved aircraft productivity, and better crew scheduling. “We sweated the assets better,” Mary grinned, alluding to the carrier’s renewed focus on aircraft-on-ground (AOG) reduction and shorter turn — or turnaround — times. Currency volatility was still a sore point, especially with Kenya Airways’ exposure to the U.S. dollar. “We were impacted in Q2, but we have FX management policies in place, matching revenue currencies with liabilities, which have thus far cushioned the impact of the shock.” ” At year-end, we had a small net benefit from currency revaluation based on our timely restructuring of dollar-denominated leases.”

On the liquidity front, it is a sign of relief for KQ. For the first time in five years, the working capital position registered a slight positive. “Yes, we’re now covering operating costs from internal cash flow,” she confirmed. “It’s a huge win.” The change reflects disciplined receivables management, renegotiated supplier terms, and improved ticket sales.

The most impactful of these has been Project Kifaru, an initiative that has been fundamental in changing KQ’s fortunes. With jet fuel a volatile cost center, KQ’s hedging strategy on fuel was a well-timed cushion. “We hedged about 60% of our annual fuel at below-market rates,” Mary said. “It wasn’t ideal, but it protected us during the Q3 spike, when crude surged over $95 a barrel.” It was this proactive risk management that helped shield operational margins. But the reduction was most obvious in MRO (Maintenance, Repair and Overhaul), crew per diems, and lease rentals, recurring themes of cost discipline. “Real savings came from the leaner contracts and localized MRO partnerships,” she said.

Operationally, however, a strategic redesign of ground processes — especially in Nairobi — provided the greatest financial benefit through the elimination of bottlenecks and increased aircraft rotation. Strategic alliances still matter. The alliance with the French carrier is already proving fruitful, with shared codes bringing in $41 million in combined revenue as well as allowing KQ to take advantage of economies of scale regarding fleet maintenance and training.

“This is more than just a partnership — this is a profit engine,” Mary said. Although much hyped and little realized in the aviation world, digitization is coming good for KQ. “Our investment in AI-driven inventory and crew rostering systems has cut overtime costs and decreased scheduling errors by 30 percent,” she said. Digital check-ins and predictive maintenance tools, along with automated revenue management platforms, have also unfettered operational efficiencies once encumbered by legacy systems.

U.S. dollar-denominated debt exposure continues