Kenya Airways has projected a substantial forex loss of Ksh32 billion for the fiscal year ending 2023, primarily due to the depreciation of the Kenyan shilling against the dollar.
Furthermore, the airline anticipates a staggering loss of Ksh64.5 billion by the conclusion of the following financial year if the exchange rate remains at Ksh151 against the dollar.
This will impact negatively on the airline’s bottom line as the carrier had this year projected a return to profitability in 2024.
The CEO, Allan Kilavuka, disclosed this during his presentation to the National Assembly Transport Committee on Tuesday.
Mr Kilavuka highlighted the critical issue facing Kenya Airways as the significant indebtedness denominated in dollars.
“Any devaluation of the Kenyan shilling against the dollar will substantially impact the airline’s financial statements,” said Mr Kilavuka.
The CEO also detailed the airline’s financial obligations, disclosing a Ksh33.4 billion debt owed to local banks, distributed among ten lending institutions.
In addition, the airline has a debt of Ksh59 billion owed to the government, which includes advances provided by the State or funds disbursed on behalf of Kenya Airways. The company also has outstanding payments to various suppliers, totaling Ksh23 billion.
The Kenyan shilling has experienced unprecedented depreciation against the US dollar, reaching a record high this week, with the Central Bank of Kenya (CBK), quoting a shilling at 149 against the dollar on Tuesday.
Notably, the local currency has depreciated by nearly 20 percent against the dollar since the beginning of the year.
Kenya Airways announced its most substantial half-year loss to date in August, as it grappled with substantial forex losses and an accumulation of debt that have disrupted its efforts to execute a turnaround strategy.
Despite achieving impressive milestones, including a remarkable 56 percent surge in revenues to Sh75 billion, a 43 percent increase in passenger numbers to 2.3 million, and the airline’s first operating profit in six years, mounting expenses pushed the company further into the negative territory.
In the six months leading up to June 2023, Kenya Airways more than doubled its losses, resulting in a loss of Sh21.7 billion.
This loss represented a significant uptick, registering a 120 percent increase from the Sh9.9 billion loss reported during the initial half of 2022. Furthermore, it surpassed the full-year loss of Sh15 billion recorded for the fiscal year 2021.