Two days after announcing an interim successor to outgoing chief executive Sebastian Mikosz, national carrier Kenya Airways has issued a profit warning indicating that this year’s profits are likely to be 25% lower compared to last year.
In a notice to The Capital Markets Authority (CMA) and The Nairobi Securities Exchange (NSE), board chairman Michael Joseph said although KQ realized improved revenue growth in the year, profitability was constrained by the increased competition in the airline area of operations, which, in turn, has increased pressure on pricing in order to remain competitive.
” In addition, the adoption of new IFRS 16 rules in 2019, has required significant adjustments to both the profit and loss statements and balance sheets for the current financial year,” reads the notice.
Mr. Joseph added that the airline’s board and management are undertaking several key strategic initiatives to improve the financial results of the company going forward.
In the last financial year, Kenya Airways posted a loss of Ksh7.5 billion as revenues jumped to Ksh114.2 billion during the period under review up from the Ksh80.8 billion posted in 2017.
Kenya Airways joins the long list of listed companies that have issued profit warnings in the current financial year.
CIC Insurance Group, NSE Kenya, Standard Group, BOC Kenya, Eaagads and Kenya Power have also issued profit warnings.
The announcement by Kenya Airways comes two days after the company announced the appointment of Allan Kilavuka as interim CEO after current chief executive Mikosz announced his decision to leave the company at the end of December.
Kilavuka will hold the position in acting capacity effective January 1, 2020, while also retaining his position as chief executive of Jambo Jet, the company’s budget carrier.