National carrier Kenya Airways (KQ) has nosedived to record Kes38.3 billion net loss in the period ended December 2022 attributable to soaring forex costs.
The company posted Kes16 billion loss in the previous period.
KQ’s wider loss for the fiscal year is attributable to huge operating costs which swelled to Kes122.4 billion from Kes77 billion offsetting a 66 percent rise in net income that closed at Kes116.8 billion.
Chairman Michael Joseph said the firm’s operations last year experienced increased demand, removal of travel curbs and KQ’s move to increase frequencies across its network.
Globally, passenger travel recovered to 68.5 percent from 41.7 percent at the height of the pandemic in 2019.
High global fuel prices hit the airline’s bottom line with KQ reporting 160 percent jump in the cost of fuel even as fleet ownership charges surged by six percent on account of provision for early aircraft returns.
Group CEO Allan Kilavuka said the airline suffered forex losses due to the restructuring of the guaranteed government of Kenya loans as part of the ongoing financial restructuring program, negatively impacting the income statement by Kes26.4 billion.
“If you remove the impact of the forex losses and the abnormal fuel cost increase at 160 percent, we would have made an operating profit,” explained Mr Kilavuka.
Mr Kilavuka projects that the company, which has remained in the red since 2012, remains on course to turn around its fortunes by next year.
According to the International Air Transport Association, a return to profitability is expected for the global airline industry this year as airlines continue to cut losses from the effects of the COVID-19 pandemic.
At the moment, KQ and South African Airways (SAA) are readying their plan to unveil a pan-African airline group in 2024 as part of its strategic deal to boost growth.