KENYA AIRWAYS: PROFIT IN SIGHT, NOT IN FLIGHT
It is possible that Kenya Airways ltd will close the current year with profit in sight and not in flight as in recent years resulting in shareholders fund being in the red by 44.96bn Ksh by the close of the year to March 2017.
That is, if the trend in the previous year to March 2017 holds true throughout the current year which is almost three months old.
The main good news was that Kenya Air cut its 22.5 Ksh loss on each 100 Ksh income in 2016 year to only 9.51 Ksh equivalent loss in 2017 and as reward for deliberate effort to restructure and get back to profit soonest.
Total income had dropped by 7.68% to 107.2bn Ksh as core revenue decreased by 8.51% to 106.2bn Ksh. Earlier in the year, the company had resolved to restructure its capital, reduce its cost profile and grow more revenue but the revenue effort, says Board Chairman, Michael Joseph, was derailed by negative exchange rate and increase in overheads due to one off charges for restructuring.
But outside these, the cost reduction effort paid and so, operating costs dropped by 12.4% to 105.38bn Ksh resulting in strong recovery from the previous year's 4.093bn Ksh operating loss to 897m Ksh profit.
In spite of the one off cost of restructuring, even non-operating costs dropped by 49.6% to 11.099bn Ksh but the figure was far too much for the little operating profit to absorb and stay black, so Kenya Air ended with 10.2bn Ksh loss before tax. Yet, that too, was quite an improvement on the loss of 26.099bn Ksh reported in 2016 year.
Continue on this same path, profit should be around the corner, and no more in flight. But the truth is aluta continua (the struggle continues) if the effort to get back to profit tagged ' operation pride' is to finally to bear fruits and bring smiles full of pride to the lips of its investors, especially the two main ones: KLM and the government of Kenya.
One major part of the struggle will be to stay on top of liquidity pressure as working capital dropped further into deficit of 44.56bn Ksh from 2016's 43.23bn Ksh After all one of the cost heads management could do nothing about within the year was interest paid which grew by 7.24% to 7.39bn Ksh in spite of the drop in revenue.
But it is one struggle, like most struggles, that could help Kenya Air develop the muscles to continue to take greater control of its costs and build more on its greater flight and cabin efficiency..
KENYA AIRWAYS; Full year, Ksh bn.
2017 2016
Total income 107.24 116.2
Core revenue 106.3 116.2
Operating costs 105.38 120.25
Operating profit 0.897 (4.093)
Other costs 11.099 22.006
Profit before tax (10.2) (26.099)
Profit margin % (9.51) (22.6)
Working capital (44.56) (43.232)
That is, if the trend in the previous year to March 2017 holds true throughout the current year which is almost three months old.
The main good news was that Kenya Air cut its 22.5 Ksh loss on each 100 Ksh income in 2016 year to only 9.51 Ksh equivalent loss in 2017 and as reward for deliberate effort to restructure and get back to profit soonest.
Total income had dropped by 7.68% to 107.2bn Ksh as core revenue decreased by 8.51% to 106.2bn Ksh. Earlier in the year, the company had resolved to restructure its capital, reduce its cost profile and grow more revenue but the revenue effort, says Board Chairman, Michael Joseph, was derailed by negative exchange rate and increase in overheads due to one off charges for restructuring.
But outside these, the cost reduction effort paid and so, operating costs dropped by 12.4% to 105.38bn Ksh resulting in strong recovery from the previous year's 4.093bn Ksh operating loss to 897m Ksh profit.
In spite of the one off cost of restructuring, even non-operating costs dropped by 49.6% to 11.099bn Ksh but the figure was far too much for the little operating profit to absorb and stay black, so Kenya Air ended with 10.2bn Ksh loss before tax. Yet, that too, was quite an improvement on the loss of 26.099bn Ksh reported in 2016 year.
Continue on this same path, profit should be around the corner, and no more in flight. But the truth is aluta continua (the struggle continues) if the effort to get back to profit tagged ' operation pride' is to finally to bear fruits and bring smiles full of pride to the lips of its investors, especially the two main ones: KLM and the government of Kenya.
One major part of the struggle will be to stay on top of liquidity pressure as working capital dropped further into deficit of 44.56bn Ksh from 2016's 43.23bn Ksh After all one of the cost heads management could do nothing about within the year was interest paid which grew by 7.24% to 7.39bn Ksh in spite of the drop in revenue.
But it is one struggle, like most struggles, that could help Kenya Air develop the muscles to continue to take greater control of its costs and build more on its greater flight and cabin efficiency..
KENYA AIRWAYS; Full year, Ksh bn.
2017 2016
Total income 107.24 116.2
Core revenue 106.3 116.2
Operating costs 105.38 120.25
Operating profit 0.897 (4.093)
Other costs 11.099 22.006
Profit before tax (10.2) (26.099)
Profit margin % (9.51) (22.6)
Working capital (44.56) (43.232)
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