How engine shortages and high fuel costs are slowing recovery efforts at Kenya Airways

Kenya Airways is preparing to release its half-year results, with management warning that grounded aircraft, high fuel costs and global shortages of engines and spare parts continue to weigh on its financial recovery.

The national carrier has spent years working to restore its financial health, but the process has been complicated by a difficult operating environment. Three of its Boeing 787 Dreamliners were grounded for much of the first half of the year as global shortages of engines and spare parts prolonged maintenance timelines.

“Engines are taking longer to repair. It used to take 60 days; now it is taking 120 days or more. Why? Because the aviation industry is flourishing. Spare parts are harder to source,” said Kenya Airways acting chief executive George Kamal.

Every grounded aircraft reduces the number of seats available for sale, limiting passenger numbers and revenue. The capacity constraints have come alongside high fuel costs, which typically account for about 30 per cent of an airline’s operating costs.

Despite the challenges, demand remains strong. More than 90 per cent of available seats on the airline’s US and European routes were filled in March.

“The major issue is that profit per seat is very low,” Kamal said.

Kenya Airways says its recovery strategy is focused on restoring capacity while strengthening its financial position. The grounded Dreamliners are gradually returning to service. The airline is targeting full capacity by the end of the year and a fleet of more than 60 aircraft within three years.

The carrier continues to contend with legacy debt. The government has assumed Ksh63.1 billion of the debt, which is expected to be converted into equity once a strategic investor is secured. Kenya Airways is also pursuing a Ksh64 billion recapitalisation while implementing measures to reduce operating costs.

“A lot of our debt is as a result of all of our fleet that we acquired at the same timing, and many things happened after that, the latest being Covid and then the elevated fuel prices,” said chief financial officer Mary Mwenga.

“We continue to pay for all this debt, but something comes in and affects your cash flow, and you still have to balance your operations with these capital-intensive investments. So we have plans to retire this debt at the right timing.”

The airline is seeking to diversify its revenue streams and reduce reliance on passenger travel. It is targeting growth in cargo and aircraft maintenance services for other carriers, including European airlines. Cargo currently contributes about 11 per cent of revenue, with a target of 20 per cent over the next two to three years.

Kenya Airways is also targeting December 2026 to secure a strategic investor who can inject fresh capital and support the turnaround.

The airline’s recovery will ultimately depend on its ability to restore its fleet, contain operating costs and convert strong passenger demand into sustainable profits.