Kenya Airways H1 loss widens as weaker shilling hurts

NAIROBI (Reuters) -Kenya Airways said on Tuesday its pretax loss widened in the first half of 2023 as a weaker Kenyan shilling eclipsed improved revenues.

The airline, one of Africa’s three biggest, has been insolvent since 2018 after an expansion drive left it with hundreds of millions of dollars of debt it could not service.

Its pretax loss rose to 21.7 billion shillings ($149.45 million) in the first half from 9.9 billion shillings a year earlier.

Hellen Mwariri, the airline’s chief financial officer, told an investor briefing that foreign exchange losses jumped to 15.3 billion shillings from 398 million shillings in the same period in 2022.

The shilling has struck repeated record lows since late 2021 and is down 15% so far this year against the dollar.

“The reason why this has a significant impact on our results is because we have a lot of legacy debt, about $1 billion of debt, and when you reconvert it using the new exchange rates, it hits your P&L (profit and loss account),” said Allan Kilavuka, Kenya Airways chief executive officer.

Kenya Airways shares were suspended from trading on the Nairobi Securities Exchange in March 2020, pending the completion of a restructuring plan.

Total revenue in the first half rose 56% to 75.1 billion shillings from 48.1 billion shillings in first half of 2022, while operating costs rose to 74.1 billion shillings from 53.1 billion shillings in the first six months of last year.

Revenues were lifted by an increase in passenger numbers to 2.3 million from 1.6 million in the first half of 2022, the airline said.

($1 = 145.2000 Kenyan shillings)

(Reporting by George Obulutsa Editing by Alexander Winning and Mark Potter)