Kenya Airways says recovery on course as losses reduce

By Duncan Miriri NAIROBI (Reuters) - Kenya Airways Ltd reported a reduction in pretax losses and a return to profit at the operating level on Thursday, after carrying a record number of passengers in the past year, and said it expected a financial restructuring would be completed shortly. The airline, partly-owned by Air France KLM and the Kenyan government, has struggled to return to profit after tourist traffic slumped four years ago following a spate of attacks by Somalia-based Islamist militants. But losses before tax were down by 60.9 percent at 10.2 billion shillings ($98.8 million) in the year ended March 31 and the company reported an operating profit of 897 million shillings which compared with a loss of 4 billion shillings in the previous year. Mbuvi Ngunze, the outgoing chief executive, said the improvements put it in a good position to boost its capital and restructure debt. The share price was up 2.3 percent at 6.75 shillings following the results. "There were doubting Thomases out there who said KQ is dead and buried," Ngunze told Reuters. "But we said we are resilient." Passenger numbers were up by 5.4 percent last year at a record high of 4.5 million, with the average percentage of seats sold up 4 percentage points at 72.3 percent of capacity, boosted by a 13 percent jump in traffic on African routes. The improvements came as the airline cut its fleet by eight widebody Boeing aircraft in the last 18 months to combat overcapacity and costs. "We have gone back to basics. We have had to unlearn, learn and re-learn how to do business in a changing competitive context," said Ngunze, who became CEO in 2014 as the airline sank into the red. He said the airline's main risk now was currency depreciation in countries like Egypt, Sudan, South Sudan, Angola, Mozambique and Nigeria, making it hard to price services and repatriate cash. Global carriers had $400 million stuck in Nigeria at the height of its foreign exchange crisis last year but this year the government had worked with the industry to introduce solutions like forward purchase options, he said. Sebastian Mikosz, who helped turn around Poland's ailing national flag carrier LOT Polish Airlines, will replace Ngunze next month. In reference to his turbulent time at the helm of the airline, Ngunze quoted Theodore Roosevelt at the end of his presentation of the full year results to investors. "It is not the critic who counts; not the man who points out how the strong man stumbles," he said. "The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood." ($1 = 103.2500 Kenyan shillings) (Editing by Katharine Houreld, Greg Mahlich)