Kenya Airways reduced first-half losses by 20 percent, helped by cost cuts, and will start flights to New York next year, its new chief executive said on Friday as the company presses ahead with its turnaround.
The airline, part-owned by Air France KLM, completed a $2 billion debt restructuring this week as part of turnaround plans after a slump in Kenyan travel and high financing costs on new Boeing jets sent it to the country’s biggest ever corporate loss -- 26 billion shillings ($251 million) -- in its 2016 financial year.
Shares in the company were suspended from trading on Wednesday for two weeks while it prepares to convert some loans into equity as part of the debt restructuring.
“There is still room to improve but there is growth and that is a good signal for us,” said CEO Sebastian Mikosz at an investor briefing after the company reported a pretax loss of 3.77 billion shillings for the six months to Sept. 30.
Operating profit rose 52 percent from a year earlier to 1.44 billion shillings, with Mikosz citing higher passenger numbers and reduced costs. Revenue was flat, curbed by a drop in domestic and intra-Africa passenger traffic because of jitters over Kenya’s presidential election in August, which was subsequently nullified by the Supreme Court.
“Hopefully we don’t have another presidential election so we can get on with life,” said Kenya Airways Chairman Michael Joseph.
“This is probably going to be a 6-12 months journey, if not longer, before we really see the results,” he said of the impact of the financial restructuring on the company’s turnaround plan.
CEO Mikosz said that sub-Saharan Africa’s third-largest carrier by fleet size behind Ethiopian and South African airlines would start flying to New York in the next six to 12 months after the United States said it would allow direct flights from Nairobi. Mikosz said the operation will ultimately bring the company hundreds of millions of dollars.
Kenya Airways flies to 53 destinations, many of which are in Africa.
“Connecting Africa to the world will remain our task,” said Mikosz, a former Polish Lot Airlines head, who took the helm at Kenya Airways in June.