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Kenya Airways Cuts Half-Year Losses to $82.4 Million, Details Restructuring Plans
As Kenya Airways struggles to shrug off its losing streak, the airline announced it has cut its first-half losses by almost a third as the reopening of travel markets enabled it to more than double passenger revenues.
The airline reported a loss of $82.4 million during the half-year period ending June 2022, according to disclosure in a recent investor briefing.
The improved passenger market drove an overall 76% increase in group revenues to 48.1 billion Kenyan shillings ($398 million) which was mainly driven by an 85% jump in passenger numbers to 1.61 million over the first six months of 2022. This, however, remains 33% lower than the pre-Covid levels.
Cargo revenues also saw an increase, as it came on top of the strong growth in the segment reported for the same period last year. Cargo tonnage increased by 39% compared to the same period in 2021, demonstrating continuous outstanding growth in air freight services.
Kenya Airways chairman Michael Joseph said, ”The opening of borders worldwide has led to quick rebounds in some key markets. Lingering travel restrictions in some markets have limited the recovery.”
The increase in revenues was though in part countered by the sharp rise in fuel costs. It meant the SkyTeam carrier remained in the red for the first half, though it did reduce its operating loss to 5 billion Kenyan shillings from 7.3 billion Kenyan shillings.
”If we adjusted for the fuel price spike, the operating profit for the period would have been 1.5 billion [Kenyan shillings],” Joseph narrates.
“During the first half of 2022, operations were positively impacted by pent-up demand and the removal of travel restrictions, resulting in a strong and sustained recovery in trading performance compared to a similar period in the prior year,” the airline said.
Despite the bounce-back from the pandemic-era travel slump, Kenya Airways is still struggling to recover from its losing streak.
However, the airline’s management is trying to change that. According to CEO Allan Kilavuka, a new phase of restructuring would see the airline cut the fleet and destinations. The CEO is determined that the airline will not only survive but also strengthen its position as a leading airline across the continent.
Already on its part, the airline said it has been able to negotiate a 19% reduction in rental jet costs. It now needs the Kenyan government to step in and help settle the outstanding debts owed to the lessors.
“We will need a financier and the financier at the moment is going to be government, to be able to overall improve the health of the balance sheet,” the CEO said.
He further suggested that extra funding or equity conversion are possible options that Kenya’s National Treasury can consider for settling the debts.
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