Kenya Airways has announced its first half-year profit in more than ten years, marking a significant turnaround for the airline. The company reported a profit after tax of 513 million Kenyan shillings ($4 million) for the period from January to June, reversing a massive 21.7 billion shilling loss in the first half of the previous year. This achievement is a major milestone for the airline, which has struggled financially for over a decade.
The airline’s return to profitability was driven by several factors, including a 22% increase in revenue during the first half of the year. This growth was largely due to a 10% rise in passenger numbers, signaling a strong recovery in air travel demand. The resurgence in passenger traffic is a crucial development for Kenya Airways, which is one of Africa’s largest carriers and a key player in the continent’s aviation industry.
Allan Kilavuka, the Chief Executive of Kenya Airways, expressed optimism about the airline’s future during a briefing. He noted that the company is now in a better position than it has been in years and is on track to potentially break even for the full year of 2024. Kilavuka described the first-half results as a milestone for the airline, reflecting the progress made in stabilizing the business and improving its financial performance.
Kenya Airways has faced significant challenges over the years, leading to its descent into insolvency in 2018. The airline’s financial troubles began after an ambitious expansion plan left it saddled with hundreds of millions of dollars in debt. The situation worsened with the onset of the COVID-19 pandemic, which brought international travel to a near standstill and severely impacted the airline’s operations. The pandemic, coupled with a sharp depreciation of the Kenyan shilling and rising interest rates, made it increasingly difficult for the airline to manage its debt.
The company’s financial struggles were compounded by years of losses, with Kenya Airways remaining in the red since 2013. The airline’s debt burden and operational challenges led to a prolonged period of financial instability, casting doubt on its ability to recover. However, the recent profit announcement suggests that the airline is beginning to turn the corner.
One of the key factors contributing to Kenya Airways’ improved financial performance is the strengthening of the Kenyan shilling. The currency’s rally earlier in the year, driven by the successful sale of a new international bond by the Kenyan government, played a crucial role in reducing the airline’s foreign exchange losses. The stronger shilling has provided some relief to the airline, which has significant exposure to foreign currency-denominated debt.
Kilavuka highlighted the importance of the stronger shilling in the airline’s financial recovery. “The Kenya shilling has significantly strengthened against the U.S. dollar … so obviously that has helped us to reduce the foreign exchange losses,” he said. The currency’s appreciation has eased some of the financial pressure on Kenya Airways, allowing it to focus on improving its operational efficiency and revenue generation.
