National carrier Kenya Airways (KQ) ended its loss-making streak by posting a net profit of Sh513 million in the half year to June, helped by reduced debt service costs.
The airline last recorded a profit of Sh384 million in the half year to June 2013 and had been making losses since then.
The new profit reversed a net loss of Sh21.7 billion in the half year of 2023. KQ attributed the improved performance to a 97 percent drop in other expenses following the government's takeover of its $641.4 million (Sh82.7 billion) loan as part of interventions to aid the carrier’s turnaround.
The loan which now forms part of the country’s external commercial debt has further been converted into a Kenya shilling facility and its terms extended, accruing savings to KQ from an interest and foreign exchange fluctuations standpoint.
The other costs fell to Sh687 million from Sh22.8 billion contributing to the carrier’s rare profitability.
“The loan is now a Kenya shilling facility which reduces the exposure from a currency fluctuation perspective. This was the biggest loan in our book and hence any movement in the exchange rate had a significant impact on KQ financials. To support KQ in its turnaround program, the loan was extended for a longer period supporting us from a cash-flow perspective, KQ's chief finance officer Hellen Mwaniri said on Monday.
The carrier also maintained an operating profit for the period at Sh1.2 billion, up from Sh998 million a year earlier.
This came as revenue rose to Sh91.4 billion from Sh75 billion, with operating expenses rising at a relatively slower pace to Sh90.1 billion from Sh74 billion.
Part of KQ’s lower other costs was also attributable to the strengthening of the Kenyan shilling in the period.
The company's chief executive Allan Kilavuka says the booked profit after a decade is a testament to the airline’s pursuit of a turnaround from years of loss-making and operational support from taxpayers.
“We had an intention of breaking even in 2024 in our journey to recovery. We had already recorded an operating profit (full year 2023), and we had targeted our first net profit,” he said.
