Table of Contents
Key Points
- Kenya Airways resumed trading on the NSE after a five-year suspension, following improved performance and the withdrawal of renationalization plans.
- KQ's share price surged 9.88% to Ksh4.45 on resumption, raising its market capitalization to Ksh23 billion ($178 million).
- KQ's net profit of Ksh513 million ($4 million) for H1 2024 signals a strong turnaround after years of financial struggles and COVID-19 setbacks.
Kenya Airways Plc (KQ), one of Africa's largest airlines, has been readmitted to trading on the Nairobi Securities Exchange (NSE) after a five-year suspension. The move follows a period of financial difficulties for the national carrier, led by South African-born Kenyan businessman Michael Joseph.
The suspension, imposed in 2020 after the government announced plans to renationalize the airline, was lifted after those plans were abandoned. The NSE cited improved company performance and the withdrawal of the renationalization plan as key factors behind the reinstatement.
“The suspension on the trading of Kenya Airways PLC shares was lifted following the company’s recent performance, which saw the company record a profit after tax and the withdrawal of the National Aviation Management Bill 2020,” the NSE noted.
Market reaction
Investors reacted positively to the news, driving KQ’ share price up 9.88 percent to Ksh4.45 ($0.0344) on its first day of resumed trading.
This represents a notable increase from its last traded price of Ksh3.42 ($0.026) on June 29, 2020, prior to the suspension. The surge boosted the airline’s market capitalization to Ksh23 billion ($178 million).
On the Uganda Securities Exchange, where KQ is cross-listed, the stock traded at Ush108.89 ($0.0295), giving it a market capitalization of Ush619 billion ($167.8 million).
Financial turnaround
KQ fell into insolvency in 2018 after an aggressive expansion strategy left it saddled with debt. The situation worsened during the COVID-19 pandemic, which grounded global travel and forced the airline to contend with plummeting revenues. In 2020, KQ reported a net loss of Ksh36.2 billion ($306.1 million).
Under the leadership of Chairman Michael Joseph, the airline embarked on a comprehensive restructuring effort dubbed Project Kifaru, focusing on operational excellence, customer satisfaction, innovation, and sustainability. The turnaround strategy has begun to bear fruit, with KQ achieving its first profit after tax since 2013.
For the six months ending June 30, 2024, Kenya Airways posted a net profit of Ksh513 million ($4 million), a dramatic reversal from the Ksh21.7 billion ($167.8 million) loss recorded in the same period a year earlier.
“The impressive performance reaffirms the operational viability of our business and underscores the effectiveness of the collective efforts by our board, management, and staff,” Joseph said in a statement. “This achievement underscores the strength and resilience of Kenya Airways as we move forward on our path to sustained profitability.”
A long road ahead
Kenya Airways faces lingering challenges despite recent progress. The airline must tackle its debt and sustain profitability amid fluctuating fuel prices, rising costs, and competition from regional players like Ethiopian Airlines and South African Airways.
As part of its strategy, KQ is streamlining operations, expanding its network, and improving customer experience to reclaim its position as a top African carrier. Analysts remain cautiously optimistic, stressing the need for financial discipline and market adaptability.
The resumption of trading on the NSE reflects renewed investor confidence, with performance closely watched in the coming quarters. Kenya Airways is back in focus, eyeing a potential turnaround.
