Kenya Airways records first operating profit in six years

Kenya Airways has defied the odds by reporting its first operating profit in six years, showcasing a remarkable turnaround for the National Carrier. Despite facing heavy forex losses, the airline managed to achieve a 56 percent growth in revenues to 75 billion shillings, along with a 43 percent increase in passenger numbers to 2.3 million. In a recent interview with CNBC Africa, Kenya Airways CEO Allan Kilavuka shed light on the positive performance and the challenges the airline still faces moving forward. Kilavuka highlighted that while the airline successfully recorded an operating profit, it also endured significant unrealized forex losses due to the conversion of debt from US dollars to Kenya shillings. These losses led to a finance charge of about 22 billion shillings, dampening what could have been an even more stellar financial performance. However, Kilavuka remained optimistic about the future, stating that the airline was not losing money but rather facing finance costs related to exchange rate fluctuations. He emphasized the need to reduce debt levels and explore options to convert dollar-denominated loans into the local currency. Kilavuka outlined three key strategies to address the issue of forex losses, including converting loans to Kenya shillings, raising additional capital, and hoping for a strengthening of the Kenya shilling to offset losses. The CEO expressed pride in the operational excellence of Kenya Airways and reassured stakeholders that the airline was on track to achieve profitability by the following year. As part of the debt restructuring process, Kenya Airways is actively working on re-denominating US dollars through government support and appointing a financial advisor to navigate the complex restructuring journey. While acknowledging the legacy debt accumulated over the years, Kilavuka reiterated the airline's commitment to strengthening the brand, focusing on customer service, enhancing operational efficiencies, and expanding the regional fleet. In terms of future growth opportunities, Kenya Airways aims to bolster its cargo business, with plans to increase capacity and improve reach into key markets such as the Middle East, Asia, and Europe. The airline is set to introduce additional freighters to support agricultural exports and enhance trade relationships across continents. On the passenger front, Kenya Airways is eyeing market expansion in lucrative routes like London, aiming to enhance flight frequency and customer accessibility. With a strategic focus on debt restructuring, operational efficiency, and market expansion, Kenya Airways is poised to navigate the challenges ahead and continue its path towards sustainable growth and profitability.