Aviation

National carrier Kenya Airways (KQ) has ended its decade-long streak of losses, reporting a net profit of Sh513 million for the half year ending June 2024.

The turnaround is attributed to a significant reduction in debt service costs following the government’s takeover of the airline’s $641.4 million (Sh82.7 billion) loan.

The airline last recorded a profit in the half year to June 2013, experiencing consistent losses since then. The latest profit represents a significant reversal from the Sh21.7 billion net loss reported in the same period last year.

KQ’s improved performance is primarily due to a 97% drop in other expenses, which plummeted to Sh687 million from Sh22.8 billion in the previous year. This dramatic decrease was driven by the government’s intervention, which saw the loan converted into a Kenya shilling facility with extended terms. This move reduced the airline’s exposure to foreign exchange fluctuations and provided much-needed financial stability.

“The loan is now a Kenya shilling facility which reduces the exposure from a currency fluctuation perspective,” said KQ’s Chief Finance Officer Hellen Mwaniri. “This was the biggest loan in our book and hence any movement in the exchange rate had a significant impact on KQ financials.”

Further contributing to the turnaround, the airline maintained an operating profit of Sh1.2 billion, a slight increase from Sh998 million in the same period last year. Revenue also climbed to Sh91.4 billion from Sh75 billion, with operating expenses rising at a slower pace to Sh90.1 billion from Sh74 billion.

“We had an intention of breaking even in 2024 in our journey to recovery,” said KQ’s CEO Allan Kilavuka. “We had already recorded an operating profit (full year 2023), and we had targeted our first net profit.”

This news marks a crucial step in Kenya Airways’ long-awaited recovery journey and signals a promising future for the national carrier.

Kenya Airways (KQ) and the International Organization for Migration (IOM) have joined forces to combat human trafficking and facilitate legal migration pathways.

The partnership will see Kenya Airways receive specialized training and expertise from IOM, equipping the airline to identify and prevent human trafficking within its operations.

The collaboration comes at a crucial time, with the government reporting 90 cases of human trafficking in 2022, though experts believe the true number is much higher due to the clandestine nature of the crime.

“In Africa, we have a vast youth population, often unemployed or underemployed,” highlighted Dimanche Sharon, IOM Kenya Chief of Mission.  “Meanwhile, destination countries face aging populations and labor shortages. This partnership offers a win-win situation, allowing for safe and regulated migration pathways.”

Kenya Airways CEO, Allan Kilavuka, emphasized the airline’s critical role in the fight against human trafficking: “As Kenya Airways, we transport 5 million people annually. It’s essential we ensure their safe, secure, and dignified movement.”

“We’ve witnessed instances of undocumented immigrants and individuals traveling without dignity. This memorandum of understanding enables us to work collaboratively to ensure safe and dignified travel for all,” Kilavuka added.

The partnership is expected to enhance awareness and training among Kenya Airways staff, strengthening their ability to detect and prevent human trafficking. It also aims to promote legal migration channels, empowering individuals to pursue opportunities safely and responsibly.

National carrier Kenya Airways (KQ) predicted on Tuesday that it will incur Ksh.32 billion in forex losses for the year ending 2023 due to the weakening shilling against the US dollar.

CEO Allan Kilavuka informed the National Assembly Transport Committee that if the shilling trades at Ksh.151 against the US dollar, the airline projects a further loss of Ksh.64.5 billion by the end of the next financial year.

“Our main challenge at Kenya Airways is the substantial debts denominated in US dollars. Therefore, any depreciation of the Kenyan shilling against the dollar significantly impacts our financials,” Kilavuka informed the legislators.

Kilavuka also disclosed that KQ owes Ksh.33.4 billion to local banks, divided among 10 lenders. Additionally, the carrier has a debt of Ksh.59 billion to the government, which includes advances and payments made on behalf of Kenya Airways. Furthermore, the airline still has outstanding payments to other suppliers amounting to Ksh.23 billion, according to the CEO.

The shilling reached a record high against the dollar this week, trading at Ksh.150.07 at the close of Monday, as per data from the Central Bank of Kenya (CBK).

Since the beginning of the year, the local currency has depreciated by nearly 18 percent against the dollar, according to data from the London Stock Exchange Group.

CBK governor Kamau Thugge attributed the devaluation of the shilling to the high demand for the dollar. Speaking before the National Assembly Finance and National Planning Committee, Thugge called for structural reforms to ensure that the supply of dollars exceeds the demand. He suggested investing in other forms of tourism to boost the flow of US currency into the country.

“The exchange rate cannot be reduced in a month; we need a continuous system to ensure sustainability,” Thugge stated. “The overvaluation of the exchange rate was caused by a decline in international reserves. In 2022, the aggressive increase in interest rates was implemented to control inflation, which had an impact on the foreign exchange rate.”

The demand for dollars in Kenya primarily comes from the energy and manufacturing sectors.

Ethiopian Airlines Group has announced its plan to increase the number of weekly passenger flights to Seoul, Republic of Korea, to six starting from October 28, 2023 with the latest Airbus A350-900 aircraft on this route.

This increase in flight frequency is a result of constructive discussions between the aviation authorities of Korea and Ethiopia. It reflects the deepening socio-economic ties and the growing partnership between Korea and the entire African continent.

Mr. Mesfin Tasew, CEO of Ethiopian Airlines Group, stated that the additional flights will play a crucial role in promoting economic, cultural, and social interactions while offering travellers more diverse and convenient connectivity options.

As a pan-African airline, we are delighted to provide additional flight choices between Addis Ababa, the diplomatic capital of Africa, and Seoul, the emerging hub of East Asia. We are particularly excited to serve our valued passengers with the latest Airbus A350-900 modern aircraft. I would like to express my sincere gratitude to the Government of the Republic of Korea for their support in enhancing our flight frequencies.

This enhancement in flight services coincides with Ethiopian Airlines’ 10th anniversary of serving Seoul, and it is part of the airline’s celebration of this special milestone.

Seoul was the 73rd destination that Ethiopian Airlines added to its network a decade ago, and since then, the airline has nearly doubled its reach, servicing over 130 destinations across five continents.