Kenya Airways (KQ) has reported an increase in loss before tax of Ksh 22 billion during the first six months of this year from Ksh 9.9 billion reported last year on account of depreciation of the shilling.
During investor briefing held Tuesday, the airline said despite recording a 120pc improvement in operating profit to Ksh 998 million for the first time in six years from a loss of Ksh 5 billion reported last year, foreign exchange losses on monetary items, loans and leases affected its profitability.
During the period under review, forex losses climbed to Ksh 3.6 billion from Ksh 1.7 billion reported over the same period last year.
“We are working to resolve the issue of the legacy debt in collaboration with our stakeholders and the Kenyan government. The debt is worsened by the 14pc devaluation of the Kenyan shilling against the dollar since January, which we have had to book as foreign exchange losses,” said Allan Kilavuka, KQ Chief Executive Officer.
The Kenya shilling has since lost at least 15pc of its value, exchanging at Ksh 145.15 against the dollar by close of trading Tuesday.
Kilavuka said the legacy debt and the devaluation of the Kenya shilling against major currencies are two concerns that continue to hold back the airline.
“The devaluation of the Kenya shilling has a significant negative impact on our financials as a majority of our transactions are carried out in the major foreign currencies. This has, in turn, an impact on our overhead costs, which have increased by 22Ppc,” he added Kilavuka.
However, the country’s flag carrier reported a revenue growth of 56pc to Ksh 75 billion compared to Ksh 48 billion the same period last year supported by increased passenger numbers to 2.3 million, a 43pc increase.
“These exceptional figures underscore the airline’s outstanding performance during the period and offer encouraging indications of ongoing recovery and turnaround initiatives that have been put in place by management to return the airline to profitability are bearing fruit,” added Michael Joseph, KQ Chairman.
The airline also reported increased operational expenses which increased 40pc to Ksh 74 billion from Ksh 53 billion last year.
