Kenya Airways Ltd narrowed its pretax loss by 12.2 percent to 26.1 billion shillings ($257 million) in the year to end-March, it said on Thursday.
However, a firmer dollar against the shilling during the year, higher financing costs and fuel hedging losses offset the impact of higher revenue, the airline said.
However, the airline incurred a loss before tax of Kshs 26.1 billion compared to Kshs 29.7 billion in the prior year, an improvement by Kshs 3.6 billion, 12 per cent.
“If there was no movement in the Kenya exchange rate, it would be 16 billion loss, not 26 billion” said the CEO Mbuvi Ngunze.
Three significant items negatively impacted the financials.
- The US dollar strengthened significantly against the Kenya shilling (12.9%) and other currencies resulting in an increase in foreign exchange loss of Kshs 9.7 billion.
- The group’s cost of borrowing increased in the financial year incurring an additional Kshs 2.3 billion in interest expense.
- In addition, the movement in international oil prices during the year unfavourably impacted the Group’s fuel hedges resulting into an additional Kshs 5,093 million in realised fuel hedges losses. However, the company registered an improvement in the mark to market valuation of fuel hedges of Kshs 2,614 million in the year.
Kenya Airways CEO said: “The results were achieved in a tough aviation context, in which airlines continue to be weighed down by wild currency fluctuations, volatility in fuel prices, and a changing commodity price environment. An industry forecast by IATA indicates that African airlines will continue to be in negative profit territory in 2016, despite overall improvement in performance. In conjunction with the overall trajectory of the results, a number of other key performance indicators for Kenya Airways also showed marked improvements.”