Kenya Airways half year loss has narrowed by 60 per cent, hinting at the possibility of success in a turnaround strategy adopted by airline a year ago.
The airline yesterday reported that after tax loss for the half year period ended September 30 had dropped to Sh4.78 billion from Sh11.95 billion posted in the same period last year.
Chief executive Mbuvi Ngunze said the improvement was underpinned by lower operating costs made possible by fleet rationalisation in line with the recovery strategy ‘Operation Pride’ launched a year ago.
Half year financial statements show direct operating costs reduced by 5.8 per cent to Sh32.75 billion from Sh34.79 billion last year.
Fleet ownership costs reduced by 35 per cent to Sh8.49 billion from Sh13.14 billion.
KQ, as its popularly known, also recorded a 4.2 per cent increase of passenger numbers to 2.2 million, but revenues dropped 3.5 per cent to Sh54.74 billion from Sh56.72 billion.
“The key goal of Operation Pride is to improve our results and we are on course,” Ngunze told an investor briefing at the airline's headquarters in Nairobi.
The turnaround strategy was launched a year ago, focusing on closing the profitability gap, reviewing the business model and optimising the capital of the airline within 18 to 24 months.
KQ's outgoing chairman Denis Awori who made his last appearance at the airline yesterday said 'Operation Pride' has a huge potential and would leave a legacy for him.
“I reiterate that KQ will return back to be the pride of Africa because of the measures we have taken,” the former envoy said.
Awori was succeeded by Michael Joseph on Wednesday following calls for “a clean up” of the top management who are blamed for the airline's poor performance.
Joseph, the former Safaricom chief executive, was elected chair on grounds that his international experience will help accelerate KQ's turnaround.
He will oversee the next phase of the turnaround plan that involves creating liquidity and lowering the debt levels.
According to Ngunze, the next phase kicks off on October 30 and is designed to place KQ on a stronger long-term financial and operational footing.
“The airline will introduce 30 new flight frequencies across the network this year. As part of winning in Africa, majority of the frequency increase will be to the over 40 destinations in the continent,” he said.