Unravelling the percentage change in KQ earnings

By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

06 April 2025

There was excitement all around when Kenya Airways announced that it made a profit of Sh5.4 billion in the 2024 financial year. This was understandable given that the airline has been making big losses over the last 14 years – since 2012. In the 2023 period, the company declared a made of almost Sh23B.

Something caught my attention in one of the slides presented at the media/investors briefing. It said that the airline improved from a loss of Sh22,864 million in 2023 to a profit of Sh5.527M and this change was indicated as an increment of 124 per cent.

Now loss is a negative number while profit is positive. If we increase negative Sh22,864M by 124pc, we get negative Sh51,215! That is, a much bigger loss! How do we get that? Well, 124pc of -22,864 is -28,351. When we add the two negative numbers, we get more negative result. Try it for yourself.

Now ordinarily, when we want to find out the percentage change in anything, we start by subtracting the final value from the initial one. Then we divide the difference by the initial value. Thus, in this case, we do Sh5,527M – -Sh22,864M = Sh28,391M. Think about it this way: suppose you were in hole that is 28m deep and you needed to climb from the bottom to the top of a platform that is 5m high above the ground. What is the total distance that you would traverse? The answer is 28m plus 5m, that is 28m.

That similar to what Kenya Airways has done: moved from a Sh23B loss to a Sh5B profit. It is truly a commendable fete. But let’s continue with the calculation of the percentage change…

The final step is to divide the difference (Sh28,391M) by the initial value (-Sh22,864M). Notice that the initial value is a negative quantity; a loss. Therefore, the division will produce a negative result. The answer is -1.24. When multiply this by 100 to get percentage, we get -124pc.

I suspect that the accountants at Kenya Airways got this exact same result but were worried about the fact that it is a negative quantity. Well, as they say, numbers don’t lie. As we saw at the beginning of this article, if the change in earnings was a positive percentage, then we would have a more negative result, that is a bigger loss.

When a company moves from being profitable to loss making, the percentage change is negative. Similarly, when it moves from losses to profits, the percentage change is still negative!