Kenya Airways Boeing 787-8 Dreamliner aircraft as seen on final approach landing at London Heathrow International Airport LHR EGLL in England, UK on 20 October 2019. (Photo by Nicolas Economou/NurPhoto via Getty Images) Kenya Airways expects earnings for the current financial year to be at least 25 percent lower than those reported for the same period in 2018.
A statement by the airline said that despite an increase in revenue factors such as increased competition and the adoption of new accounting rules will affect its results.
“Although Kenya Airways realized improved revenue growth in the year, profitability was constrained by the increased competition in the airline area of operations, which, in turn, has increased pressure on pricing in order to remain competitive,” the statement signed by board chairman Michael Joseph read in part.
“In addition, the adoption of new IFRS 16 rules in 2019, has required significant adjustments to both the profit and loss statements and balance sheets for the current financial year.”
The International Financial Reporting Standards (IFRS) 16 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months unless the underlying asset is of low value.
KQ sought to assure investors and the public that the board and management are implementing a number of key strategic initiatives to strengthen its future financial results.
Kenya’s national carrier has endured a difficult period in recent years. In August, the airline said its pretax loss of 8.56 billion Kenyan shillings ($82.95 million) in the first half of 2019 compared with a loss of 3.99 billion shillings in the same period last year.
The airline blamed increased operating costs following an expansion into new routes and the return of two Boeing 787 planes which were sub-leased.
The airline is also expected to post a bigger annual loss than the Sh7.55 billion net loss for the year ended December 2018 announced in April this year.