Image: Kenya Airways
Kenya’s National carrier, Kenya Airways, has released its full year financial results for 2022 registering improved revenue and forecasts sustainable recovery in 2024.
The Group’s revenue stood at KES 117 billion, a 66% increase from the previous year. This is 5% below the pre- pandemic reported revenue, indicative of the Groups projected recovery by 2024.
The growth in revenue was driven by a significant increase in passenger numbers which grew by 68% to 3.7million passengers, and over 65,000 tonnes, a 3.5% increase in cargo tonnage. The deployed capacity in Available Seat Kilometers (ASKs) increased by 75%, closing the year 2022 at 10.3 billion compared to 5.9 billion reported for the same period in 2021. As a result, passenger load factors for 2022 were only 3.9 percentage points below the load factors achieved before the pandemic in 2019.
Michael Joseph, chairman of Kenya Airways, said that global air passenger traffic gained momentum and recovered substantially as governments lifted covid-19 travel restrictions and passengers grasped the opportunity to resume travel, which was reflective of KQ’s performance.
“In 2022, KQs operations were impacted positively by pent-up travel demand, the removal of travel restrictions and KQs efforts to increase frequencies across its network resulting in a strong and sustained recovery in performance compared to a similar period in the prior year. As a result, global passenger traffic recovered from 41.7% of 2019 levels in 2021 to 68.5% in 2022, said Joseph.”
In 2022, despite the opening up of markets post-COVID, the aviation operating environment was affected by fuel costs that increased by 160% year on year, deterioration of the dollar and its effect on direct operating costs and global geo political issues. The tight forex demand had a significant impact on Kenya Airways’ financial transactions which are mainly carried out in the major foreign currencies specifically the devaluation of the Kenya Shilling.
According to Group managing director and CEO Allan Kilavuka, the airline would have reported a profit at operating level notwithstanding the impact of the aforementioned challenges that included the devaluation of the Kenya Shilling against major currencies.
“The airline recorded forex losses occasioned by the restructuring of the guaranteed Government of Kenya loans as part of the ongoing financial restructuring program, negatively impacting the income statement by Kes. 26.4 billion. If you remove the impact of the forex losses and the abnormal fuel cost increase at 160%, we would have made an operating profit. We are on course to turn around the business by 2024. We are confident that this will be achievable with the support we are getting from our customers, our employees, our principal shareholder the Government of Kenya and other stakeholders,” said Kilavuka.
Kenya Airways Group CFO, Hellen Mathuka, said the devaluation of the shilling and abnormal increase in fuel cost increased the cost of operations, negatively impacting overall financial results.
“Our overheads increased by 31% due to foreign currency losses driven by the weakening of Kenya shilling against major world currencies and the abnormally high cost of aviation fuel during the year. As a result, the Group’s total operating costs increased by 59%, with direct operating costs increasing by 93%, mainly driven by increased operations and a huge increase of 160% in the cost of global fuel prices throughout the year. In addition, the fleet ownership costs increased by 6% driven by the provision for early aircraft returns.” said Mathuka.