KQ restructuring plan bearing fruit as operating profit hits Sh949m

After years of loss making, national carrier Kenya Airways’ restructuring efforts appear to be bearing fruit with an improved half year performance.

In the six month period ended September, Kenya Airways (KQ) posted an operating profit of Sh949 million up from an operating loss of Sh2.2 billion a year earlier.

Operating profit represents the earning power of a company with regard to revenues generated from ongoing operations.

This saw the half year loss improve to Sh5 billion from Sh12 billion in 2015.

Kenya Airways has been implementing a recovery plan drawn up by U.S consultancy firm McKinnsey dubbed ‘operation pride’ focusing mainly on cutting costs and improving the operational efficiency of the airline.

During the six month period, revenues dipped slightly to Sh54 billion but managed to realize increased passenger traffic with 2.2 million passengers flown.

The operations were particularly boosted by the 14.2 percent increase intra Africa traffic, a key market for the airline.

Speaking during the investor briefing, Kenya Airways Chief Executive Officer Mbuvi Ngunze said the airline had so far implemented 242 out of the 555 initiatives set out in the recovery plan.

Overheads during the period edged by 14.5 percent to Sh12.5 billion, which was attributed to the investment costs of the restructuring plan.

Mr Ngunze said the restructuring efforts under operation pride were on track, with an eye on getting back to profitability.

“Good things are happening at KQ but if you stood outside and read the newspapers, you would think we’re not operating,” Mr Ngunze stressed.

Kenya Airways has been in the eye of the storm after posting a full year loss of Sh26.2 billion.

The government, which holds a 29.8 percent stake in the airline, has however been using is muscle to push for injection of new strategies to speed up the recovery process.

The move culminated with the appointment of former Safaricom boss Michael Joseph as the new board chairman.

News of the improved results appeared to have lifted shareholders expectations, with the airline’s share price up 3.7 percent to Sh7 in the first hour of trading at the Nairobi Securities Exchange.