The airline’s half-year loss more than doubled to hit Sh8.56 billion ($85.6 million) further sinking shareholders into a deeper negative equity position of Sh16.18 billion (161.8 million).
The airline attributed the 112% widening of loss to increased operating costs in the wake of its expansion into new routes and the return of two Boeing 787 planes that had been sub-leased to Oman Air.
“In turning around Kenya Airways, a deliberate decision was taken not to shrink the airline but instead improve financial performance through strategic investments on growth opportunities,” said board chairman Michael Joseph after announcing the results in Nairobi on Tuesday.
Despite the massive losses, Mr. Joseph was optimistic the airline fortunes will turn around in the future and tried to assure shareholders.
“Some of these investments may deny KQ and its shareholders an immediate return but are expected to yield positive results in the future.” He said.
The Treasury is Kenya Airways’ biggest shareholder with a 48.9% controlling stake while local banks, which converted their loans into equity, own 38.1%. Strategic partner KLM comes third with 7.8% shareholding while other investors hold 5.2% of the troubled airline.
The Nairobi Securities Exchange-listed company revenue jumped by 12.1% to Sh58.5 billion ($585 million) in the period, from Sh52.1 billion ($$521 million) in the first six months of last year.
Similarly, costs jumped 15.4% to Sh61.4 billion ($614 million) in the period from Sh53.2 billion ($532 million) last year, eating into the carrier’s margins.
The airline is set to nationalised
The Kenyan parliament recently passed a motion to nationalised the airline which has been struggling to return to profitability and growth.
Kenya Airways is now banking on the nationalisation to turn around its fortunes. It believes that the benefits of scrapping of taxes after nationalisation will improve its financial position.
