Kenya Airways (KQ), the national carrier, has projected a forex loss of Ksh. 32 billion for the year ending 2023 due to the depreciation of the Kenyan shilling against the US dollar.
The airline’s CEO, Allan Kilavuka, informed the National Assembly Transport Committee that if the shilling trades at Ksh 151 against the US dollar, the airline anticipates a loss of Ksh 64.5 billion by the end of the 2024 financial year.
“We are hopeful of a turnaround; however, the biggest threat is the forex losses, the reason we are looking for a strategic investor,” said Kilavuka.
“Our biggest problem at Kenya Airways is that we have huge debts that are denominated in US dollars so any depreciation of the Kenya shilling against the dollar is quite significant in our books.”
Kenya Airways owes local banks Ksh 33.4 billion and has a debt of Ksh 59 billion to the government.
Additionally, it owes other suppliers an amount of Ksh 23 billion.
On Monday, the Kenyan shilling hit an all-time high against the dollar, with data from the Central Bank of Kenya (CBK) showing it was trading at Ksh 150.07.
CBK governor Kamau Thugge attributed the devaluation of the shilling to high demand for dollars and called for structural reforms to ensure that dollar supply exceeds demand.
Thugge emphasized that reducing the rate cannot be achieved in a month and requires a sustainable system.
He noted that a decline in international reserves led to an overvaluation of the exchange rate and that aggressive interest rate hikes in 2022 were implemented to curb inflation, which affected the foreign exchange rate.