Kenya Airways Loss Widens as Higher Costs Mar Turnaround Planby
Foreign exchange, borrowing costs jump; shares slump by 9%
Operating loss narrowed by 75% after airline reduced fleet
Kenya Airways Ltd.’s full-year loss widened as the airline part-owned by Air France-KLM said increased foreign exchange and borrowing costs marred efforts to turn around sub-Saharan Africa’s third-largest carrier.
The after-tax loss increased to 26.2 billion shillings ($258 million) in the 12 months through March from 25.7 billion shillings a year earlier, the Nairobi-based company said in a statement on Thursday. Finance costs rose almost 50 percent to 7 billion shillings, while other costs jumped more than eight times to 10.8 billion shillings.
“We have been through a very tough year,” Chief Executive Officer Mbuvi Ngunze told reporters in Nairobi. “We are still growing even in difficult times. We are still operating, and confidently so, even with results that are losses.”
Kenya Airways plans to cut 600 jobs after shrinking its fleet by almost a third to help reverse losses, and has eliminated 80 positions to date. The company is reorganizing its balance sheet with the help of investment bank PJT Partners Inc., and Kenya’s Treasury Secretary Henry Rotich told Citizen TV on Tuesday that private equity investors could be interested in the airline. KQ, as the carrier is known, is 27 percent owned by KLM and 30 percent by the Kenyan government.
The shares fell 9.5 percent to 4.3 shillings by 10:04 a.m. in Nairobi, on track for the steepest drop in almost a year. The stock is down 12 percent in 2016, valuing the company at 6.4 billion shillings.
Kenya Airways’s operating loss narrowed to 4.1 billion shillings from 16.3 billion shillings, the company said. The improvement was partially negated by 9 billion shillings of foreign exchange losses. Sales and passenger numbers both rose.