Kenya Airways Plc, East Africa’s largest carrier, reported a sharp deterioration in its first-half 2026 financial performance as higher fuel prices, supply chain constraints, and reduced fleet capacity pushed the airline deeper into losses despite stronger revenue.

The airline recorded a loss after tax of Ksh16.08 billion ($124.23 million) for the six months ended June 30, 2026, compared with Ksh12.15 billion ($93.87 million) a year earlier, representing a 32.2% increase in net losses.

Loss before tax rose to Ksh15.92 billion ($123 million), from Ksh12.17 billion ($94.02 million) in H1 2025, while total income increased 9% to Ksh81.25 billion ($627.73 million) from Ksh74.5 billion ($575.58 million).

Revenue growth fails to offset higher costs

The revenue growth of Kenya’s national flag carrier was supported by resilient passenger demand despite operating with 9% less capacity than a year earlier. The airline’s cabin factor, a measure of passenger seat occupancy, improved by 3.9 percentage points to 76.3%, from 72.4%, while stronger aircraft utilisation and commercial performance supported revenue growth.

However, the improvement in revenue was outweighed by higher operating expenses. Total operating costs increased 13.8% to Ksh91.9 billion ($710.03 million) from Ksh80.74 billion ($623.81 million), resulting in an operating loss of Ksh10.64 billion ($82.21 million) compared with Ksh6.24 billion ($48.21 million) in H1 2025.

Middle East conflict drives fuel costs higher

Fuel costs emerged as the biggest pressure on Kenya Airways’ finances during the period, with jet fuel prices rising sharply amid geopolitical tensions in the Middle East.

The airline’s fuel bill increased 32% year-on-year, with fuel accounting for approximately 32% of total operating expenses and 52% of direct operating costs.

The higher fuel burden effectively erased the benefit of stronger revenue, placing further pressure on margins and contributing to the airline’s wider loss.

Global supply-chain constraints also weighed on operations, with shortages of spare parts and longer lead times for components limiting aircraft availability and affecting operational reliability.

Cargo business provides a bright spot

Kenya Airways’ cargo operations delivered stronger growth during the period, with cargo revenue increasing 18% year-on-year to Ksh8.77 billion ($67.76 million) from Ksh7.46 billion ($57.64 million).

The performance reflects the airline’s efforts to expand freighter capacity and increase its share of Africa’s cargo market.

Kenya Airways is targeting a long-term increase in its share of the African cargo market from approximately 11% toward 40%, providing a potential growth avenue as the carrier works to diversify revenue beyond passenger operations.

Fleet recovery offers relief

Kenya Airways has begun restoring fleet capacity after the reporting period, providing a potential boost to operations in the second half of 2026. A Boeing 787-8 returned to service in mid-July, while a Boeing 777-300ER was redelivered and rejoined the airline’s fleet.

The return of the aircraft is expected to strengthen network resilience, improve scheduling flexibility and enable the carrier to capture additional passenger demand as market conditions improve.

Management said restoring fleet availability, improving aircraft reliability and utilisation, controlling costs and protecting liquidity remain key priorities.

Kenya Airways targets recovery

Kenya Airways Chairman Kiprono Kittony described the first-half performance as a reflection of an exceptionally challenging operating environment, while pointing to measures already underway to restore the airline’s financial position. The carrier’s recovery plan focuses on tighter cost management, cash conservation, restoring fleet capacity, reducing leverage and completing a planned capital raise.

Acting Group Managing Director and Chief Executive Officer George Kamal said the airline’s ability to increase revenue despite lower capacity demonstrated continued demand for its network. Kenya Airways connects more than five million passengers and over 70,000 tonnes of cargo annually through its Nairobi hub. As the only African member of the SkyTeam Alliance, the airline provides access to more than 1,060 destinations across 173 countries through its network and alliance partnerships.

With aircraft returning to service and a capital raise in progress, the carrier is betting that stronger fleet availability, disciplined capacity management and cost controls can help reverse its losses and put the airline on a path toward profitability.