KENYA AIRWAYS PUBLISHES H1 RESULTS AS NEW CHAIRMAN TAKES CHARGE
(Posted 13th November 2015)
Not long after being elected as the new Chairman of the Board of Directors of Kenya Airways did Ambassador Dennis Awori have to step into the spotlight during the Investor’s Briefing yesterday morning at the InterContinental Hotel in Nairobi.
The airline’s financial year runs from the 01st of April to the 31st of March each year and traditionally does Kenya Airways’ top management and Board Chairman then address investors and the media with half year results covering the period of April to end September.
The sharp drop in value of the Kenya Shilling added to the financial challenges the airline is faced with to the tune of 4.8 billion Kenya Shillings alone, up from the comparable figure of 2014 which stood at 1.2 billion only. Like with the flight suspension to profitable destinations in West Africa during the early days of the Ebola hysteria was this equally beyond the airline’s control but nevertheless added to the red bottom line of about 12 billion Kenya Shillings.
Notably though, largely attributed to the cost cutting measures implemented under the leadership of CEO Mbuvi Ngunze, has the operating loss reduced to 2.2 billion Kenya Shillings, considerably down from last year’s whopping 10.5 billion. The Chairman’s report also added that a further 4 billion Kenya Shillings in one off restructuring cost were added during H1, all adding up to the losses now announced. Direct operating costs were also down by some 7.3 billion Kenya Shillings, again a result of deliberate cost cuts which were made without compromising the quality of the passenger experience in ground handling and inflight services.
While revenues remained flat overall was a slight rise by 2.2 percent achieved on the year to year comparison from October 2014 to September 2015.
In regard of passenger capacity did the report released yesterday also show some relevant developments which are expected to impact positively on H2:
Quote:
The airline offered to the market a capacity of 7,538 million measured in Available Seat Kilometres (ASK) representing a year on year reduction of 7.9%, part of the strategy to tighten capacity. During the period under review, the number of passengers carried grew by 2.0% despite the cut back in capacity. Passenger related revenues for this period remained at last year’s level of KShs 48.5 billion.
Capacity offered into Europe declined by 6.5%, driven by the introduction of the new 234 seat B787-8 operations to London in place of the larger B777-200ER aircraft, as the B777-300ER continued to serve operations on the Amsterdam route. Capacity into the Middle East and Far East regions combined shrunk by 17.3% following the replacement of the larger B777s with the new Boeing Dreamliner fleet to operate most of the destinations.
Although there was re-entry into Liberia and Sierra Leone in the second part of the half year, capacity offered within the African market still declined by 11.2% driven by tactical reduction of flights to some West African destinations in line with the demand.
In the domestic market, capacity reduced by 1.8% as the Group consolidated the operations of KQ and JamboJet. In addition to Mombasa, Kisumu and Eldoret, JamboJet introduced frequencies into Malindi, Lamu and Ukunda, albeit using smaller aircraft – the Q-400. All this has been targeted at serving the tourist market at the Coast more adequately.
Unquote
Said Ambassador Awori in his report and address yesterday morning: ‘Going forward, the main focus on the company will be on the business turnaround and the long term capital raising plan. The roadmap for this has been defined in consultation with key shareholders and we are in discussions on short term financing which is required.
The Board considers that the achievement of the above measures will safeguard and turn around the prospects of the airline.
On behalf of the Board of Directors, I take this opportunity to express my sincere appreciation to our customers, the Government of Kenya, shareholders, management, staff, suppliers and other stakeholders for their continued support to Kenya Airways’.
(Ambassador Dennis Awori, the recently elected Chairman of the Board of Directors of Kenya Airways)
With deliveries of additional B787’s and B737NG’s does the fleet presently comprise 48 aircraft, with some of the older B777-200LR’s however marked for disposal which should be accomplished during H2 of this financial year.
