SUMMARY AUDITED GROUP RESULTS
FOR THE YEAR ENDED 31 MARCH 2016
KQ reduces operating loss by 75 per cent in FY 2015/2016, turnaround strategy bearing
fruit
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Significant operating improvements
o Passenger numbers increased to 4.23 million, despite a reduction in
Available Seat Kilometres (ASK)
o Cabin factor up five per cent
o Revenue grows by five per cent to Kshs 116 billion
o Operating costs reduced by five per cent
Gross profit significantly improved, while reducing overall losses
o Gross profit up 42 per cent
o Operating margin improved by 11 percentage points
o Reduction in operating loss from Kshs 16.3 billion in FY14/15 to Kshs 4.1
billion in FY15/16
o Loss before tax reduced by 12 per cent
Continued implementation of turnaround strategy through Operation Pride
KQ now reviewing long-term options in relation to its capital structure in order to
underpin its turnaround strategy
Key stakeholders, including the Government of Kenya and KLM, remain
supportive of the company’s efforts
Nairobi, July 21, 2016…Kenya Airways Limited (KQ) today reaffirmed its progress towards
recovery after it recorded a 75 per cent reduction in operating loss from Kshs 16.3 billion in
2015 to Kshs 4.1 billion as per the group financial statements for the year to 31 March 2016.
The operating loss improvement of Kshs 12.2 billion was underpinned by a growth in cabin
factor to 68.3 per cent, with an increase in passenger numbers from 4.18 million to 4.23
million, a reduction in direct operating costs, overheads and fuel, and an increase in fleet
costs. Despite this improvement, the group incurred a loss before tax of Kshs 26.1 billion
compared to Kshs 29.7 billion in the prior year, an improvement by Kshs 3.6 billion, 12 per
cent.
Three significant items negatively impacted the financials. The US dollar strengthened
significantly against the Kenya shilling (12.9%) and other currencies resulting in an increase in
foreign exchange loss of Kshs 9.7 billion. The group’s cost of borrowing increased in the
financial year incurring an additional Kshs 2.3 billion in interest expense. In addition, the
movement in international oil prices during the year unfavourably impacted the Group’s fuel
hedges resulting into an additional Kshs 5,093 million in realised fuel hedges losses. However,
the company registered an improvement in the mark to market valuation of fuel hedges of
Kshs 2,614 million in the year.
It is important to note that excluding one-off impacts related to asset sales, compensation for
late delivery of new aircraft, write-offs, impairments and provisions, the group broke-even at
operating loss level, an improvement of Kshs 11,139 million while loss before tax improved by
Kshs 2,513 million.
Mbuvi Ngunze, Kenya Airways CEO said: “The results were achieved in a tough aviation
context, in which airlines continue to be weighed down by wild currency fluctuations, volatility
in fuel prices, and a changing commodity price environment. An industry forecast by IATA
indicates that African airlines will continue to be in negative profit territory in 2016, despite
overall improvement in performance. In conjunction with the overall trajectory of the results, a
number of other key performance indicators for Kenya Airways also showed marked
improvements.”
Operation Pride
As part of the airline’s turnaround strategy Operation Pride – whose main planks are closing
the profitability gap, refocusing the business model as well as optimising the capital of the
company – KQ has rationalised its fleet through selling off and leasing some of its surplus
aircraft, and monetised certain assets. A staff right-sizing exercise is ongoing. The plan aims
at both revenue and cost-side improvements. These actions have already reduced fleet costs
by about $7 million from July 2016, thus improving the airline’s liquidity.
Mr Ngunze commented: “One of the key goals of Operation Pride is a reduction of the gap in
profitability, which is on track. We have also revised our network to improve connectivity and
ability to sell flights to more destinations within the network, while densifying our Africa
presence through increased frequencies. We are turning the corner and are in a better place,
strategically. Most significantly, and in a difficult global business environment, we are
improving our business and keeping a tight lid on our costs. I thank all our employees,
shareholders, partners and associates whose cooperation and input made these improved
results possible.”
Consideration of long-term options in relation to the Company’s capital structure
After extensive internal review of alternatives, KQ has reviewed the options in relation to its
capital structure in order to ensure the financial flexibility, stability, and sustainability that is
commensurate with the turnaround strategy.
The aim is to place Kenya Airways on a stronger footing and provide a stable base for longterm growth. The company will also continue its focus on improving service quality.
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Stakeholder Support and Interim Financing
“The Government of Kenya and KLM, in their capacity as major investors in Kenya Airways,
have indicated their continued strong support of the company’s operational turnaround and the
capital structure optimisation process; are closely involved throughout the process and intend
to remain major stakeholders in the company over the long term,” said Mr Ngunze.
Further, as announced in the last financial year, the company secured bridge financing to the
tune of USD 200 million. The first tranche of USD 100 million was received in September 2015
and the second tranche was received in July 2016. This borrowing is supported through an onlending agreement from the Government of Kenya as a key stakeholder.
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SUMMARY CONSOLIDATED INCOME STATEMENT
31 Mar 2016
KShs M
31 Mar 2015
KShs M
116,158
110,161
Direct costs
(67,861)
(76,059)
Fleet ownership costs
(29,578)
(25,932)
(22,812)
(120,251)
(24,503)
(126,494)
Operating loss
(4,093)
(16,333)
Operating margin (%)
(3.5%)
(14.8%)
Finance costs
(7,047)
(4,734)
8
153
(4,155)
(7,452)
Other costs
(10,812)
(1,346)
Loss before income tax
(26,099)
(29,712)
(126)
3,969
Loss after tax
(26,225)
(25,743)
Net profit margin (%)
Loss per share (KShs)
(22.6%)
(17.53)
(23.4%)
(17.21)
Revenue
Overheads
Finance income
Losses on fuel derivatives
Income tax (charge)/credit
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SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Loss for the year
Other comprehensive income
Loss on hedged exchange differences
Gain/(loss) on hedged fuel contracts
Revaluation of leasehold land, property and equipment
Deferred taxation on hedges
Total other comprehensive income
Total comprehensive income for the year
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31 Mar 2016
KShs M
31 Mar 2015
KShs M
(26,225)
(25,743)
(7,180)
1,761
1,940
(3,479)
(5,192)
(2,830)
(427)
(8,449)
(29,704)
(34,192)
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 Mar 2016
KShs M
ASSETS
Non-current assets
Property and equipment
Intangible assets
Prepaid operating lease rentals
Aircraft deposits
Others
Current assets
Inventories
Trade and other receivables
Current income tax recoverable
Assets held for sale
Bank and cash balances
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity attributable to owners
Non-controlling interest
Total equity
Non - current liabilities
Loans and borrowings
Deferred tax liability
Others
120,871
802
2,015
2,177
2,840
128,705
125,422
1,163
1,237
10,391
2,798
141,011
1,922
15,084
1,218
6,659
4,827
29,710
158,415
1,897
14,819
1,222
19,847
3,267
41,052
182,063
(35,718)
51
(35,667)
Current liabilities
Sales in advance of carriage
Fuel derivatives
Trade and other payables
Loans and borrowings
Others
TOTAL EQUITY AND LIABILITIES
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31 Mar 2015
KShs M
(6,009)
46
(5,963)
113,216
2,264
5,126
120,606
104,175
1,487
1,724
107,386
13,004
3,163
24,040
29,316
3,953
73,476
158,415
11,270
6,928
17,131
43,609
1,702
80,640
182,063
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Share premium Reserves
KShs M
KShs M
KShs M
Non controlling Total Equity
Interest KShs M
KShs M
Year ended 31 March 2016
At 1 April 2015
Comprehensive income
Loss for the year
Other comprehensive income
Total comprehensive income
7,482
8,670
(22,161)
-
-
46
(5,963)
5
5
(26,225)
(3,479)
(29,704)
-
-
(26,230)
(3,479)
(29,709)
7,482
8,670
(51,870)
51
(35,667)
As at 1 April 2014
Comprehensive income
Loss for the year
Other comprehensive income
Total comprehensive income
7,482
8,670
12,034
43
28,229
-
-
(25,746)
(8,449)
(34,195)
3
3
(25,743)
(8,449)
(34,192)
At 31 March 2015
7,482
8,670
(22,161)
46
(5,963)
At 31 March 2016
-
Year ended 31 March 2015
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-
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
31-Mar-16
KShs M
31-Mar-15
KShs M
13,404
8
(6,893)
(157)
6,362
5,904
153
(4,734)
(109)
1,214
(561)
7,215
(525)
(414)
5,715
(75,551)
4
88
(1,307)
(76,766)
Cash flows from financing activities
Borrowings received
Repayment of borrowings / lease obligations
Net cash (used in) /generated from financing activities
24,213
(34,730)
(10,517)
101,533
(33,932)
67,601
Net increase / (decrease) in cash and cash equivalents
1,560
(7,951)
Cash and cash equiv at beginning of year
3,267
11,218
Cash and cash equivalents at end of year
4,827
3,267
Cashflows from operating activities
Cash generated from operations
Interest received
Interest paid
Income tax paid
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property and equipment
Proceeds from disposal of property and equipment
Deposits paid / refunds received
Other
Net cash from /(used in) investing activities
Media Contact: Wanjiku Mugo. wanjiku.mugo@kenya-airways.com tel: +254714619221
About Kenya Airways
Kenya Airways, a member of the Sky Team Alliance, is a leading African airline flying to 54 destinations
worldwide, 44 of which are in Africa and carries over four million passengers annually. The airline was recently
voted the Leading Airline in Africa by passengers in the World Travel Awards. It has also been voted the Leading
Airline in Africa – Business Class four years in a row. Kenya Airways has a fleet of 36 aircraft that are some of the
youngest in Africa; this includes its flagship B787 Dreamliner aircraft. The on-board service is renowned and the
lie-flat business class seat on the wide-body aircraft is consistently voted among the world’s top 10. Kenya
Airways takes pride in being at the forefront of connecting Africa to the World and the World to Africa through its
hub at the new ultra-modern Terminal 1A at the Jomo Kenyatta International Airport in Nairobi. For more
information, please visit www.kenya-airways.com.
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