Kenya Airways shouldered Sh18 billion financing cost by end of December 2022 linked to repaying a dollar-denominated loan guaranteed by the government amid forex turmoil that has significantly weakened the shilling.

The forex exchange losses, together with the worsening of fuel costs, pushed the national carrier to more than double its losses to Sh38.27 billion during the period, with the operation cost also taking a hit. 

The airline closed the previous financial year ending December 2021 with a net loss of Sh15.88 billion, meaning the airline made about Sh1.87 billion losses every month across 2022 to post the worst-ever performance.  According to the Chief executive Allan Kilavuka, forex losses occasioned by the restructuring of the guaranteed loans negatively impacted the income statement of Sh26.4 billion.

Operating profit

“If you remove the impact of the forex losses and the abnormal fuel cost increase at 160 per cent, we would have made an operating profit. We are on course to turn around the business by 2024” said Kilavuka. Towards late last year, US Export-Import Bank issued Kenya with a default notice over the pending repayment Sh57.8 billion loan that the government guaranteed the airline.

The guaranteed loan by the State last year was $525 million (Sh69.01 billion) following KQ’s successive repayment defaults. The CEO is, however, confident that a turnaround will be achievable through sales, staff, and support from the government and other stakeholders.