Latest news with #AllanKilavuka
Zawya
02-04-2025
- Business
- Zawya
Enduring lessons for Africa from Kenya Airways' financial turnaround
Kenya Airways return to profit after an 11-year drought, is emblematic of the challenges and opportunities of African Aviation. It also demonstrates that if it takes a professional approach, Africa has the talent to manage and turn round most of its pressing problems. Home to 18 percent of the world's population, Africa accounts for a paltry 2.2 percent of global air passenger traffic. The miniscule number combined with positive economic growth rates and a young population are often presented as evidence of the unmet need and therefore opportunity for growth of air transport. But the same number also reflects the fragility of the air transport business in Africa. Margins are woefully thin, with airlines barely making a dollar on each passenger they carry. Markets are disconnected, complicated by closed skies, policy dissonance and a supply chain where everything costs airlines at least 30 percent more. Kenya Airways $42 million profit for 2024, was delivered by a mix of topline growth, cost management and a propitious exchange rate. Twelve years ago, just before it plunged into the loss that would shock the nation in 2014, everything was going well for Kenya Airways. Betting on a booming African market, it invested in expansion, launching long-haul routes to Asia. Then everything rapidly unravelled after the outbreak of Ebola in West Africa, throwing all plans into disarray and the airline into a crisis of a disconnected market, rapidly falling revenues and mounting debt. As the crisis at Embakasi deepened, the shareholders did what we often do in such situations — outsource expat management. Yet a whole suite of expatriates were easily overwhelmed by the challenge at KQ. There are several lessons from all this. Above them is that in Africa, you don't have to do anything wrong for things to go south. And when they do, the solution is not necessary to be found outside the continent. Chief executive Allan Kilavuka, who led KQ's turnaround was managing its budget subsidiary, Jambojet. Running a small airline on a small budget probably gave him the experience that made him best-suited to nurse the stricken airline back to life. But he was lucky too. The sheer scale of KQ's predicament, shocked critical publics into supporting the painful trade-offs that would be necessary if the carrier was to have a fighting chance. With board chair Michael Joseph at the helm, and the prying eyes of lenders who converted their loans into equity, the quality of governance at KQ went a notch up. Last year's performance is not just the result of resilience but a combination of the right strategy, the courage to carry through difficult decisions and patient shareholders. Despite continuing challenges, KQ's rebound makes a case for the much-maligned state-owned airlines in Africa. Were KQ a purely private airline, it is doubtful that the will to save it would have been as resolute or that the resources to do so would have come around. Ultimately, KQ should and will in time be privatised. But the enduring lesson for now, is that Africa should learn to look inwards for solutions and create a system that allows its best to rise to the top. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
Zawya
27-03-2025
- Business
- Zawya
Forex gains lift Kenya Airways from more than a decade of losses
National carrier Kenya Airways has posted its first full year profit after more than a decade of losses, buoyed by foreign exchange gains. The airline posted an all-time high net profit of Ksh5.4 billion ($41.7 million) for 2024, a turnaround from a Ksh22.6 billion ($205.4 million) loss in 2023— its first full year profit in 12 years.'Our ratio earnings before interest tax, depreciation and amortisation was 20 percent in 2024, which is higher than the industry's average of 17 percent and demonstrates the strong performance during the year,' Kenya Airways chief executive officer Allan Kilavuka told a briefing on Tuesday.'This is the highest profit that this company has reported in its history,' he added. A key driver of KQ's improved performance in 2024 was foreign exchange gains of Ksh10.55 billion ($81.5 million), compared to a loss of Ksh15.04 billion ($116.1 million) in 2023, as the local currency strengthened by more than 20 percent against the dollar last year. The stronger Kenyan shilling also helped KQ save Ksh1.2 billion ($9.3 million) on its foreign currency denominated liabilities. The airline's operating profit for the year rose to Ksh16.62 billion ($128.3 million) from Ksh10.53 billion ($81.3 million) in 2023, helped by higher revenues and lower costs. Passenger, cargo numbersKQ's total revenue rose by six percent to hit Ksh188.4 billion ($1.5 billion) from Ksh178.4 billion ($1.4 billion) a year prior, while passenger numbers rose four percent during the year to 5.23 million, a historical high, from 5.04 million passengers in 2023. Cargo volumes, meanwhile, rose faster than passenger numbers at 25 percent to 70,776 tonnes from 56,576 tonnes a year earlier. During the year, Kenya Airways increased its cargo lift with an addition of two aircraft to its fleet, while expanding its passenger operations to three new destinations- Mogadishu, Maputo and Eldoret. The airline remains committed to attracting a new equity investor in 2025 to provide a significant cash injection to stabilise its recent performance and ensure the long-term stability of the carrier. However, the search for a new strategic investor has stalled as KQ's majority shareholder—the government of Kenya —weighs options to calm the turbulence the national carrier faces.'We look into the future with a great amount of anticipation. We have produced a profit but what we really need is a huge capital injection to improve the airline, including flying to new destinations and improving passenger experiences,' KQ board chairman Michael Joseph said. KQ has identified other headwinds to its business that need to be addressed, including the deterioration of its on-time performance in 2024 and higher than normal flight cancellations.→ kmuiruri@
Zawya
26-03-2025
- Business
- Zawya
Kenya Airways reports historic profit of KShs 5.4bln for the 2024 financial year
Nairobi, Kenya — Kenya Airways PLC has announced an after-tax profit of KShs 5.4 billion for the financial year ending December 31, 2024. This represents a remarkable turnaround from a loss of KShs 22.6 billion reported the previous year, reflecting an improvement of KShs 28 billion and a 124% increase in net profit. This achievement has significantly strengthened the company's financial health, positioning it for future growth and stability. This success highlights the effectiveness of the recovery strategy under Project Kifaru, which has focused on enhancing operational performance through various initiatives and delivering exceptional customer service through specific actions. This comprehensive strategy has been instrumental in our turnaround. Financial Highlights: - Turnover rose by 6%, driven by increased passenger numbers. - Total costs increased by 9%, aligning with capacity growth. - Operating profit surged by 58%, showcasing effective cost management. - Profit after tax saw a remarkable improvement of 124%. Operational Highlights: - Capacity offered increased by 10%, measured in Available Seat Kilometers (ASKs). - Passenger numbers grew by 4%, reaching an impressive total of 5.23 million. - Despite the increase in market capacity, yield remained consistent with the previous year. Commenting on the historic financial performance, Kenya Airways PLC Chairman Michael Joseph stated, "These results not only set records for the highest number of passengers and turnover in Kenya Airways' history but also signify our strong operational viability and resilience. The impressive financial performance underscores our ongoing commitment to customer focus, operational excellence, financial discipline, cultural transformation, innovation, and sustainability." Allan Kilavuka, Kenya Airways' Group Managing Director and CEO, mentioned that the airline is still focused on attracting a strategic investor to ensure long-term sustainability. "Despite the ongoing global challenges faced by the aviation industry, such as shortages of aircraft, engines, and spare parts, our turnaround strategy is yielding positive results. We are dedicated to completing our capital restructuring plan to reduce financial leverage, enhance liquidity, and remain an attractive investment for strategic investors." Looking ahead, Kenya Airways is committed to optimizing its network, investing in fleet expansion, modernizing cabin interiors, and diversifying business segments to ensure sustainable growth while adapting to the evolving dynamics of the aviation industry. -Ends- About Kenya Airways: Kenya Airways (KQ), The Pride of Africa, is a leading African carrier on a mission to propel Africa's prosperity by connecting its people, cultures, and markets. We fly to 45 destinations worldwide, 37 of which are in Africa, connecting over 5 million passengers and over 70,000 Tons of cargo annually through our Hub at Nairobi's Jomo Kenyatta International Airport. As the sole African carrier in the SkyTeam Alliance, we open up a world of possibilities for our customers, connecting them to over 1,060 destinations in 173 countries. We take pride in offering a delightful flying experience with a caring African touch. Our exceptional African hospitality has consistently earned us global recognition including the prestigious Skytrax World Airline Awards where we were honoured with the Best Airline Staff and Best Airline Cabin Crew in Africa in 2024. For more information, visit or call our 24-hour Customer Services Desk at +254 20 327 4747. We are also available on Twitter: @KenyaAirways & @KQSupport, Facebook: @OfficialKenyaAirways, and Instagram: @OfficialKenyaAirways. For media enquiries, please contact Kenya Airways Corporate Communications:
Zawya
18-03-2025
- Business
- Zawya
Kenya Airways sees regional growth, jobs despite Precision Air's financial woes
Kenya Airways (KQ) has been forced to review the status of its 41.23 percent shareholding in Precision Air Services Plc as the Tanzanian subsidiary faced mounting financial troubles. With total liabilities exceeding total assets, the resulting negative shareholder equity signals a bad state of financial health for Precision Air, reducing the possibility of the Kenyan national carrier recovering the money invested in it. Kenya Airways chief executive Allan Kilavuka said they are reviewing their investment in Precision Air in line with the overall turnaround plan for KQ.'Our investment in Precision Air is not merely about short-term financial results but about ensuring long-term connectivity, job creation and economic opportunity for the regions it serves,' Mr Kilavuka told The EastAfrican in an emailed response to our query. 'As the national airline, we have a clear turnaround strategy that is already yielding positive results, and we are applying the same disciplined approach to assessing the best path forward for Precision Air.'A decision will mostly come after consultations with KQs' own stakeholders, regulators and experts. But Kilavuka argued financial prudence will be the key guide, besides the desire to support easier air connectivity in the region. It is a decision Kenya Airways has been forced into after facing the possibility of losing its entire investment in the Tanzanian subsidiary valued at around Tsh1.32 billion ($498,383). Years of accumulated losses and mounting debts have eroded the subsidiary's shareholders' equity, pushing it into a state of technical insolvency. Precision Air's hopes of survival now hinge largely on successful debt restructuring negotiations with bankers and creditors. And KQ, which is also weighed down by depleted working capital and shareholder equity balances, risks losing its entire investment in Precision Air should the troubled subsidiary be liquidated. KQ is itself trying to reclaim its financial footing following years of its own accumulated losses and debts.'A negative shareholder equity points to either a history of accumulated losses, high level of debt and significant asset depreciation. In the case of Precision Air, the airline has been suffering from swelling accumulated losses. As such, the airline has faced cash flow issues as well as legal issues related to debt, thereby affecting operations,' said Melodie Gatuguta, a research associate for banking at Standard Investment Bank.'With regard to the airline as an investment to KQ, if the firm were to liquidate, KQ may receive little to no return on its investments. In addition, if KQ is interested in exiting its position, it may find it difficult to lock in prospective buyers with regards to valuation,' she added. Shareholder equity refers to how much money a company has after subtracting all its expenses and debts. A negative shareholder equity arises when a company owes more money to investors than its assets can cover. A negative shareholder equity is often a bad sign since it means the company has not only been losing money, but has lost more money than its owners have put into the company in the first place.'Precision Air can turn around its operations and return to profitability, there may still be opportunities for recovery and growth,' said Ms Gatuguta.'In the event of liquidation of Precision Air, equity holders will be paid last. They will pay banks and suppliers before shareholders,' said Ken Gichinga, a Chief Economist at Mentoria Economics. Read: Kenya Airways, Precision Air seek waiver extension of competition rulesPrecision Air fell into a net loss of Tsh57.38 billion ($21.66 million) in 2023 from a net profit of Tsh5.91 billion ($2.23 million) in 2022. Its negative working capital deteriorated to Tsh537.5 billion from Tsh485.9 billion in the same period. Its total liabilities exceeded total assets resulting in a shareholders' deficit position of Tsh491.2 billion ($185.45 million) a worse off position compared to a shareholders' deficit position of Tsh433.8 billion ($163.78 million) in 2022. Precision Air was financed by loans totalling to Tsh435.3 billion ($164.35 million) in 2023 up from Tsh398 billion ($150.27 million) in 2022, and these loans have been classified as current due to breach of agreements.'The group and company also defaulted on their debt obligations as stipulated in the debt agreements resulting in debts amounting to Tsh435.3 billion ($164.35 million) being due on demand,' Precision Air said in its annual report (2023).'Because of this default, the inability of the group and company to generate cash that would be sufficient to settle arrears and instalment payments as per the debt agreements and the on-going discussions with the lenders on possible rescheduling of the borrowings, there is no reliable basis for developing a reliable liquidity risk profile for borrowings,' it added. Kenya Airways acquired a minority 49 percent shareholding in Precision Air in 2003. Precision Air would be listed on the Dar es Salaam Stock Exchange in December 2011, with a total of 7,056 investors participating in the initial public offering (IP0). The IPO sold 16 percent stake in Precision Air to the public diluting KQ's shareholding to 41 percent. Currently, KQ's investments in Precision Air is valued at around Tsh1.32 billion ($498,383) for a 41.23 percent stake according to Precision Air's annual report. KQ is the second largest shareholder in Precision Air after the estate of the late Tanzanian Michael Shirima, which owns the majority 42.91 percent shareholding. The public holds the remaining 15.86 percent of the shares.'Both airlines (KQ and Precision Air) are grappling with negative equity due to prolonged losses, heavy debt burdens and pandemic-related disruptions. Despite a rebound in passenger demand, accumulated deficits still outweigh assets, reflecting the financial strain,' said Ngugi Waweru, a research analyst at Faida Investment Bank. 'For investors, negative shareholder equity raises concerns. For instance, with a negative equity position, it is unlikely for the airlines to pay dividends as profits (if any), which must go towards rebuilding equity and servicing debt.'Precision Air said it will continue focusing on improving profitability and liquidity to ensure it remains competitive in the market with a key focus on pursuing restructuring of the aircraft loan facility and entire balance sheet and continuous engagement of creditors to agree on payment plans based on the paying ability of the company and in line with projected cash flows. Precision Air has invested in two subsidiaries—Precision Handling Ltd and Precise Systems Ltd—both of which are dormant, with their investments impaired to the tune of Tsh1 billion ($377,563) and Tsh10 million ($3,775.63), respectively. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
