Kenya Airways. Picture: REUTERS
Kenya Airways. Picture: REUTERS

Nairobi — Kenya Airways reduced first-half losses by 20%, helped by cost cuts, and will start flights to New York in 2018, its new CEO said on Friday as the company presses ahead with its turnaround.

The airline, part-owned by Air France KLM, completed a $2bn debt restructuring this week as part of turnaround plans after a slump in Kenyan travel and high financing costs on new Boeing jets sent it to the country’s biggest ever corporate loss — 26-billion shillings ($251m) — in its 2016 financial year.

Shares in the company were suspended from trading on Wednesday for two weeks while it prepared to convert some loans into equity as part of the debt restructuring.

"There is still room to improve but there is growth and that is a good signal for us," said CEO Sebastian Mikosz at an investor briefing, after the company reported a pretax loss of 3.77-billion shillings for the six months to September 30.

Operating profit rose 52% from a year earlier to 1.44-billion shillings, with Mikosz citing higher passenger numbers and reduced costs.

Revenue was flat, curbed by a drop in domestic and intra-Africa passenger traffic because of jitters over Kenya’s presidential election in August, which was subsequently nullified by the supreme court.

"Hopefully we don’t have another presidential election so we can get on with life," said Kenya Airways chairperson Michael Joseph.

"This is probably going to be a 6-12 month journey, if not longer, before we really see the results," he said of the effect of the financial restructuring on the company’s turnaround plan.

CEO Mikosz said sub-Saharan Africa’s third-largest carrier by fleet size behind Ethiopian and South African airlines, would start flying to New York in the next 6-12 months after the US said it would allow direct flights from Nairobi.

Mikosz said the operation will ultimately bring the company hundreds of millions of dollars.

Kenya Airways flies to 53 destinations, many of which are in Africa.

"Connecting Africa to the world will remain our task," said Mikosz, a former Polish Lot Airlines head, who took the helm at Kenya Airways in June.

Reuters

Please sign in or register to comment.