The national carrier Kenya Airways (KQ) has reported a Sh38.26 billion net loss for the full year to December, the worst-ever in its decade-long loss-making streak.
KQ reported a 141.77 percent drop in losses from Sh15.8 billion posted in 2021, surpassing the Sh36.2 billion loss the airline booked in 2020 when global aviation operations were grounded during the peak of the Covid-19 pandemic.
The airline’s management has blamed increased fuel costs, foreign exchange losses caused by the weakening of the Kenyan currency and a Sh18 billion one-off loss incurred when the government took over a dollar-denominated facility.
“Net financing costs increased by Sh23 billion because of a one-off transaction that was taken during the year pertaining to the takeover of a USD-denominated loan by the Kenyan government, which basically converts the loan from US dollars to Kenyan shillings,” said KQ’s chief finance officer Hellen Mathuka.
The airline also stated that it incurred a loss of Sh5.7 billion due to foreign exchange vulnerabilities as the Kenyan shilling depreciated against the US dollar.
KQ Managing Director, Allan Kilavuka, however, remains bullish that operations of the airline have already taken an upward trend in the first quarter of 2023, promising that the airline could report a profit next year.
“Without the significant impact of fuel price increase, we are a profitable business,” Mr Kilavuka said.
While the airline’s revenues increased by 66 percent (Sh46.5 billion) to Sh116.7 billion in 2022, total operating costs also went up by 58.9 percent, to Sh122.4 billion.
The airline carried 3.7 million passengers last year, growing from the 2.2 million travellers in 2021, while its cargo operations also grew from hauling 63,726 tonnes in 2021 to 65,955 tonnes.
The airline in January issued a profit warning, signifying that its net earnings would fall by at least 25 percent, blaming the expected negative performance on forex losses from hedging on its US dollar-denominated debt that was last year taken over by the government.
In February, Treasury Principal Secretary Chris Kiptoo told Parliament that the Exim Bank of the US issued a default notice to Kenya over delayed servicing of a Sh57.8 billion loan, revealing the airline’s continued financial turmoil, which has caused it to rely on State bailouts.
But the government, with a 48.9 percent stake, has expressed its discontent with continued support, slashing planned capital injection from Sh30 billion to Sh20 billion in the current financial year through the supplementary budget I of 2022/23.
This is now the 10th year that KQ has consecutively made losses. It last reported a profit in 2012 of Sh1.6 billion.
