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{
    "id": 1421213,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1421213/?format=api",
    "text_counter": 98,
    "type": "speech",
    "speaker_name": "Hon. Murkomen",
    "speaker_title": "The Cabinet Secretary for Roads and Transport",
    "speaker": {
        "id": 440,
        "legal_name": "Onesimus Kipchumba Murkomen",
        "slug": "kipchumba-murkomen"
    },
    "content": " Mr. Speaker, Sir, by way of introduction, I hope this is the last time I will answer the question about KQ because it is our intention to return it to a private company so that the Government of Kenya does not continue subsidizing it. Therefore, the public will not have a stake and we shall not come to answer questions about private companies in Parliament. Our effort in the Kenya Kwanza Manifesto is to make sure that we offload all the shares that the Government owns in KQ so that we return it to a profitable private company that will not require the subsidies that we have had to provide. If we convert the debts that they owe the Government of Kenya to equity, it increases their shareholding. Hopefully, our manifesto objectives of getting a strategic investor will make it the last time we discuss KQ. Mr. Speaker, Sir, as captured in the table below, I am sure the hon. Senator has the response which was submitted in good time. The Ministry through KQ reported an operating profit in the first half of the Financial Year 2023; a milestone it had not reached in the previous six years. The Airline has made a 120 percent significant improvement reporting an operating profit of Kshs998 million compared to the same period in the previous year where there was a reported loss of Kshs5 billion. Table No. 1.0 explains further. The growth was fueled by the 56 per cent increase in group revenue reaching an impressive Kshs75 billion. Additionally, our passenger numbers surged to 2.3 million, an impressive 43 per cent growth from1.6 million. Our earnings before interest tax, depreciation, amortization and rent costs witnessed a commendable upswing of seven points. Our gross profit improved by an impressive 131 per cent resulting in these commendable outcomes. We acknowledge that our legacy debt brought down the impressive operating results primary to the huge forex losses because of the depreciation of the Kenya Shilling against the United States (US) Dollar. These forex losses were primarily due to the re-evaluation of the US Dollar denomination loans and liabilities. This finance charges in total amount of Kshs22 billion therefore heavily impacted on our overall results. The airline industry is highly competitive and therefore profit margins in the industry are thin. According to the International Airport Transport Association (IATA), the average net profit margin for the global airline industry is typically less than five per cent. An overview of airline profitability compared to other industries is captured below- Vulnerability to external factors. Airlines are highly vulnerable to external factors that can impact the profitability including fluctuations in fuel prices, currency devaluation, supply chain challenges and geopolitical events. Capital intensity: Airlines require significant capital investment in aircraft maintenance and infrastructure which can limit their profitability. This is unlike other businesses that do not have the same level of capital intensity."
}