How Kenya Airways Found Its Positive Altitude In FY2024

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.

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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.

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U.S. dollar-denominated debt exposure continues to pose a challenge, but not a death knell. “We are hedging forex naturally—earning more in dollars through ticket sales in the diaspora markets and dollarized cargo contracts,” Mary said. Dollar exposure was 12% lower than FY2023 levels as of Q4.

Fleet-wise, it has only three aircraft grounded, and these are largely awaiting spares. “Each one costs us about $320,000 a month in lost opportunity,” she acknowledged, “but we’re improving as our supply chain stabilizes.” Future installments of the airline’s modernization plan won’t cost an arm and a leg. “We’re leasing next-gen, fuel-efficient aircraft on short-to-midterm contracts.

No more long-term liabilities,” Mary promised. KQ is gambling on asset-light growth — more leasing, less debt. That’s a balance sheet model that keeps it flexible while without detracting from fleet renewal.” On the topic of interest payments impacting the airline’s ability to reinvest, Mary agreed there was pressure but framed it positively. “Yes, finance costs are still painful; however, lower fixed-adjusted rates, better earnings are enabling reinvestment selectively, largely in technology-infrastructure and route expansion.

As for those pesky cash flow gaps that keep appearing? “We’re creating buffer capital through strong cash conversion cycles and better liquidity forecasting. Our long-term plan is simple: achieve six quarters of EBITDA positive, and refinance on better terms.” THE TARGET is ambitious but not unrealistic — especially if revenues continue to increase as they have been. Not even high global aviation insurance costs have clipped KQ’s wings.

“Yes, premiums have increased, and in particular on some of our older aircraft. But by consolidating policies and creating loss-prevention incentives, we’ve been able to flatten the curve. “It’s not a runaway cost anymore.” By the end of our time, Mary leaned back, a rare mix of cautious optimism and quiet confidence in her eyes. “This was the year that we showed ourselves — and our creditors — that we can fly a different way. More intentionally. More profitably.” And for the first time in years, it’s not only the planes at Kenya Airways that are getting off the ground; the balance sheet is going up, too.

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