Kenya Airways, the national flag carrier of Kenya, announced a widened operating loss of Sh21.7 billion in the half-year ended June 2023 from Sh9.9 billion in 2022. This widened loss was mainly due to a foreign exchange hit that the airline incurred due to the depreciation of the Kenyan shilling against major international currencies.
Despite the widened loss, the airline managed to record its first operating profit since 2017. This was achieved due to cost cutting measures implemented by the airline, such as the reduction of fleet size, yield management, and staff restructuring. These cost management measures enabled Kenya Airways to offset the foreign exchange hit and bring down its losses.
The profitability of the airline in the first half of 2023 grew by 2.2% as compared to the same period in the previous year, attributing to improved passenger yields. Additionally, the airline also managed to maintain a good liquidity position with its ability to generate enough cash to cover its short term liabilities. Nevertheless, the airline reported a decrease in passenger volumes as compared to the previous year, due to the continued impact of the global pandemic on air travel.
Looking forward, the airline is anticipating growth on the back of robust economic fundamentals in Kenya and the region, as well as an expected gradual increase in air travel in the coming months. Kenya Airways also aims to enhance its focus on customer experience and optimize its cost structure as part of its attempts to move into a more sustainable path going forward. Furthermore, the airline could also explore the potential of partnering with larger international carriers and airports, as well as evaluate regional expansions to increase its flight network and customer base.
In conclusion, despite the widening net loss due to the foreign exchange hit, Kenya Airways was able to generate its first operating profit in six years by implementing cost cutting measures. Going forward, the airline is expecting the growth in air travel to continue in the upcoming months, thereby allowing it to further increase its profitability and sustain its operating profit.
by: your-udaku-mate