Absurdity of KQ’s enduring losses despite massive bailouts


It was in 2012 when Kenya Airways (KQ) recorded Sh1.66bn net profit. Since then, the national carrier has continued its run of losses as it recorded yet another dip in profit for the year ending December 2022.
The company reported a Sh38.2 billion loss before tax for the financial year ending December 2022 as compared to Sh15.87 billion posted in 2021 thanks to strikes, high fuel cost and the depreciation of the local currency.

The airline saw its total cost for 2022 rise to Sh155.1 billion from Sh86.4 billion. This was mainly driven by fuel prices, which increased by 160%, other direct operating costs which increased by Sh12.4 billion and net financing cost which increased by Sh23 billion because of a one-off transaction that was taken during the year pertaining to the takeover of a US dollar-denominated loan by Kenyan government which converted the loan to Kenyan shillings.

The total operating cost for the year increased by 59% to stand at Sh122.4 billion from Sh77.0 billion in 2021. The pilot’s strike the airline faced in November, which ended up causing a number of flight cancellations, also saw the airline take a financial hit worth Sh1.3 billion.

In the last three years, the airline has not seen profit and worse off, it has been surviving on bailouts. However, it wasn’t all gloom for the national carrier as it managed to record a number of improvements – there was an increase in total revenue by 66% from Sh70.2 billion in 2021 to Sh116.8 billion in 2022, largely due to a rise in passengers and cargo business. Passenger numbers increased by 68% to 3.7 million from 2.2 million while the volume of cargo increased by 3% from 63,726 tonnes to 65,955 tonnes. This is a major improvement as the airline continues to gain momentum post pandemic.

The KQ board is hoping that the airline will break-even in the 2023 financial year and start seeing profit in 2024 despite an accumulated loss of Sh172.68 billion. According to Michael Joseph, Kenya Airways Chairman, global air passenger traffic gained momentum and recovered sustainability.

“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,” Joseph said.

The airline’s managing director, Allan Kilavuka said that the airline would have recorded an operating profit, were it not for the restructuring and the fuel price increases, and is on course to do so by 2024.
“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,” he said.

The airline is moving forward with its plan to form a partnership with South African Airways (SAA) in bid to launch a pan-African airline group in 2024 that will operate under a single Air Operator Certificate (AOC), making it one of the largest airlines in the continent. The airline said the deal will boost intra-Africa connectivity and support economic growth through trade and tourism as well as see the airline truly live up to its mantle as the pride of Africa.

Sign Up