KA applauds loss recovery

23Jul 2016
The Guardian Reporter
Business
The Guardian
KA applauds loss recovery

Kenya Airways (KA) Limited has reported a success story in its drive to recover the loss it had been incurring in the past two years, recording 75 percent reduction in operating loss from Ksh16.3bn last year to Ksh4.1bn in the first quarter of this year.

The Ksh12.2bn operating loss improvement was underpinned by a growth in cabin factor to 68.3 percent, with an increase in passenger number from 4.18 million to Ksh4.23m worth reduction in direct operating costs, overheads and fuel and an increase in fleet costs, according to the Airline’s statement.

However, it was an improvement that was negated by a Ksh9bn impact of foreign exchange losses, increased borrowing costs and unwinding fuel hedges in which the group had incurred before-taxed loss of Ksh26bn last year against that of Ksh30bn billion the previous year, marking an improvement by 12 percent worth of Ksh4bn.

The airline’s Chairman, Ambassador Dennis Awori said in the statement that the main focus of the company would be to build on the gains made in the airline’s turnaround strategy that included closing profitability gap, refocusing the business model as well as creating a sustainable financial structure.

He said his company offered to the market a capacity of 14,744 million measured in Availability of Seat Kilometres (ASKs) representing a year-on- year reduction of 4 percent as part of strategy to tighten capacity, while capacity uptake improved by 3 percent.

During the period, the number of passengers grew by 1.2 percent to 4.23 million despite the cut back in capacity, resulting in a growth in cabin factor of 5 percent to 68.3 percent, raising the passenger-related revenue by 5 percent to Ksh95bn, he said.

While cargo revenue was reduced 9 percent with a decline in available cargo capacity resulting in a volume reduction of 10 percent, other revenue including proceeds from sale of slots in London increased by Ksh2.5bn, the statement said.

The rationalization of operations coupled with the respite in fuel prices influenced the reduction in total direct operating costs by Ksh8bn to Ksh68bn. Fleet ownership costs increased by Ksh 4 billion during the period comopared to Ksh29 billion in the previous year, according to the statement.

The increase reflects both the full year impact of the aircrafts purchased or leased over the last years, as well as onerous lease provision for aircraft sold or sub leased, driven by the concerted efforts to reduce and contain costs.

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