File image of a Kenya Airways plane. PHOTO/ COURTESY Kenya Airways (KQ) has posted a pretax loss of Ksh.8.56 billion in its 2019 half year earnings to June 30.
This marks a more than double increase in losses for the airline which recorded a Ksh.4 billion loss for the same period last year.
The expanded loss, which is against a recent trend of loss cutting by the carrier, is attributable largely to both increased operational costs and elevated impairment losses.
KQ saw its operational costs expand by Ksh.10.9 billion to Ksh.67.1 billion as the carrier struggled to break on its increased routes and flights frequency.
The elevated costs grew ahead of revenues made in the period by Ksh.2.3 billion, offsetting earnings accrued from new destinations which were estimated at Ksh.2.3 billion.
At the same time, the carrier incurred a one-off impairment loss of Ksh.1.9 billion and a further shrink of Ksh.1.5 billion from increased provisioning from a shift in accounting rules.
“The switch from IAS 9 to IFRS 16 cost Ksh.1.5 billion with operational leases now being considered as assets in financial statements,” said KQ’s Chief Financial Officer Hellen Mathuka said.
While the airline’s network expansion drive has bruised earnings in the period, the carrier is keen on sticking to the strategy while seeking out cost management interventions to reap from the strategy.
“If we manage costs, we can manage the bottom line. Costs have always been our biggest concern,” said Kenya Airways Chairman Michael Joseph.
“We have to keep sweating our current fleet by being in the air more often. This is achievable by employing the same fleet for network expansion,” added Kenya Airways Chief Executive Officer Sebastian Mikosz.
Kenya Airways has prior to the half year report pushed for increased network and route expansion including the launch of new destinations to Geneva, Milan, New York and Mogadishu.Video Of The Day: | NEWSNIGHT | Punguza Mizigo, BBI or No Referendum?