KQ narrows pre-tax loss to Sh4.7 billion as carrier’s restructuring drive takes off

Kenya Airways, the country’s flagship carrier, has narrowed its pre-tax loss to Sh4.73 billion from Sh11.86 billion in 2015, indicating that the floundering flyer is finally on the road to recovery.

Speaking today, Kenya Airways Chief Executive Officer Mbuvi Ngunze said that the carrier’s loss narrowed as KQ posted an operating profit of Sh949 million for the six months ended in September, up from an operating loss of Sh2.2 billion the previous year.

“Across Africa we faced the challenge of currency fluctuations and a changing environment driven by lower commodities,” he said in a speech issued this morning.

“KQ has continued to be resilient despite these challenges managing to achieve improved results. We’re in a marathon and not a sprint…and it is beginning to bear fruit,” added Ngunze.

KQ has been reducing the size of its fleet, selling non-core assets like land and sacking employees to try and cut costs following years of losses, due in part to a slump in Kenya’s tourism sector that was caused by terror attacks.

During the period under review, passenger numbers grew by 4.2 per cent to a total of 2.2 million in the first half of FY 2016/2017 and traffic across Africa grew by 14 per cent. In the first half of FY 2016/2017 KQ had a one off cash injection of KES 1.7 billion from sale of assets.

The flyer stated that lower operating costs were made possible by fleet rationalisation in line with the recovery strategy ‘Operation Pride’.

The carrier, which is partly-owned by Air France KLM and the Kenya government, said today that KQ Cargo has signed a partnership with e-commerce platform, G-Market Africa to offer customer solutions in West Africa.

KQ’s total revenue fell to Sh54.748 billion in April-September, from Sh56.72 billion a year ago, but the pre-tax loss narrowed to Sh4.73 billion shillings from Sh11.86 billion, Finance Director Dick Murianki told an investor briefing this morning.

The announcement follows the KQ’s appointment of former Safaricom chief, Michael Joseph last week. Joseph will serve as the company’s chair. Pilots had threatened to strike last week, demanding management changes, but called off the action when Joseph’s appointment was announced.

On his part, Kenya Airways CFO Dick Murianki said KQ’s turnaround strategy ‘Operation Pride’ continues to be “the main focus of the company.” Operation Pride focuses on 3 main priorities: Closing the profitability gap, Refocusing the business model and Optimizing capital.

 

 

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