Kenya Airways has reaffirmed its progress towards returning to profitability after it recorded a Sh949 million operating profit for the first six months ended September 30 - the first half of FY 2016/2017.
This is compared to an operating loss of Sh2.2 billion in the prior period, a 143.6 per cent swing.
The improvement in operating performance was underpinned by growth in cabin factor by 3.3 per cent during the period, with an increase of passenger numbers by 89,000 to 2.2 million and lower operating costs made possible by fleet rationalisation in line with the recovery strategy ‘Operation Pride’.
During the period, the airline flew nine per cent more hours than the same period last year with seven fewer wide-body aircrafts.
The airline reduced its direct operating costs by Sh2 billion to Sh32.8 billion mainly driven by fuel prices.
Fleet ownership costs reduced by 35 per cent to Sh8.5 billion. This includes additional aircraft impairment of Sh1.8 billion.
The reduction in capacity saw revenues drop marginally by 3.5 per cent to Sh54.7 billion.
The airline uplifted less tonnage during the period due to decrease in wide body capacity leading to revenue from cargo decreasing by 20.9 per cent.
The US dollar continued to strengthen against the Kenyan Shilling and other currencies during the period with the average exchange rate rising to Sh101.6 per US Dollar compared to Sh98.76 the prior year.
This led to a foreign exchange loss of Sh1.6 billion. The Group’s cost of borrowing increased during the period to Sh3.8 billion.
Kenya Airways CEO Mbuvi Ngunze said: “Across Africa we faced the challenge of currency fluctuations and a changing market environment driven by lower commodity prices. Kenya Airways has continued to be resilient despite these challenges managing to achieve improved results.”
The airline’s turnaround strategy, ‘Operation Pride’ continues to be the main focus of the company going forward. It is a comprehensive programme endorsed by our key shareholders including the Government of Kenya and KLM.
“One of our key goals of Operation Pride is to improve our results and we are on course. We continue reviewing our operations to ensure we remain competitive in the market. We now operate a leaner but efficient airline,” said Ngunze.