Kenyan airline still flies in loss

National carrier, Kenya Airways (KQ) has recorded a post-tax loss of Sh26.2 billion for the year that ended March 31 up from a full year loss of Sh25.7 billion in 2015.

The group’s cost of borrowing increased in the financial year incurring an additional Kshs 2.3 billion in interest expense.

In addition, the movement in international oil prices during the year impacted negatively on the Group’s fuel hedges resulting into an additional Kshs 5,093 million in realised fuel hedges losses.

The airline’s Chief Executive Mbuvi Ngunze during the announcement on thursday said that the results were achieved in a tough aviation context, in which airlines continue to be weighed down by wild currency fluctuations, volatility in fuel prices, and a changing commodity price environment.

“An industry forecast by IATA indicates that African airlines will continue to be in negative profit territory in 2016, despite overall improvement in performance. In conjunction with the overall trajectory of the results, a number of other key performance indicators for Kenya Airways also showed marked improvements.” He said

Mbuvi added that without fluctuation of the exchange rate the airline would have reduced the loss to Sh16 billion compared to the Sh26 billion that they had reported.

However, the company registered an improvement in the mark to market valuation of fuel hedges of Kshs 2,614 million in the year.

The airlines revenue grew by 5 per cent to Sh116 billion in the period under review from Sh110 billion in 2015 while total assets went down to Sh158 billion from Sh182 billion in 2015.

KQ according to reports had a Sh5 billion fuel burn-off benefit after selling off its Boeing 737-300.

Passenger numbers also rose by five per cent in 2015 from 4.17 million the previous year to 4.23 million.

Further, as announced in the last financial year, the company secured bridge financing to the tune of USD 200 million.

The first tranche of USD 100 million was received in September 2015 and the second tranche was received in July 2016. This borrowing is supported through an on-lending agreement from the Government of Kenya as a key stakeholder.

The airline plans to send home another 600 workers starting May on their second phase of sacking, four years after it fired 400 staff, 80 staff were sent home on July 8, 2016 during the first phase.