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Abu Dhabi, UAEWednesday 26 September 2018

Kenya Airways to find more lift as business environment improves

As losses shrink, carrier is showing signs of recovery after it came close to collapse last year

Kenya Airways planes near Nairobi. The airline expects a better second half. Reuters
Kenya Airways planes near Nairobi. The airline expects a better second half. Reuters

Kenya Airways expects much better performance in the second half of this year, helped by an improved business environment, and after prolonged election uncertainty in Kenya in the second half of 2017 hit passenger numbers.

The airline, which is 7.8 per cent owned by Air France KLM , reported a pretax loss of 3.99 billion shillings (Dh146.9m) for the first half of 2018, from a loss of 5.7bn shillings during the same period last year.

Kenya Airways this year changed its financial reporting period to match the calendar year. Previously its financial year was to the end of March. Comparisons given in its first-half results were with January-June 2017.

In the second half of 2017, Kenya Airways' domestic and intra-Africa passenger traffic dropped because of jitters over Kenya's presidential election in August. The election was subsequently nullified by the Supreme Court and a rerun held with President Uhuru Kenyatta elected for a second term.

"August is already behind us. I can confirm we are already much better than the previous August, in terms of traffic, in terms of domestic growth," chief executive Sebastian Mikosz said on Wednesday.

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Kenya Airways is showing signs of recovery after it came close to collapse last year, leading to a $2bn financial restructuring in November that included a government bailout which shrank Air France KLM's stake.

The carrier said its revenue rose 3 per cent to 52.19bn shillings, but total operating costs rose by 4 percent to 53.22bn shillings due to rising global fuel prices.

The airline has said it would resume aviation fuel hedging in the second half of this year after price volatility drove up its costs.

Mr Mikosz said two weeks ago the airline's board approved the plan to hedge.

"Effects of the hedging policy will only be felt in 2019,"he said.

Passenger numbers increased 7 per cent in the first half to 2.3 million, it said.

Kenya Airways, which plans its first non-stop flight to New York in October, said it was preparing to launch at least three new routes next year, with Europe, Middle East and Asia as a possibility, Mr Mikosz said.

At 11.31 GMT, Kenya Airways shares were trading up 2.36 per cent at 10.85 shillings a share on the Nairobi Securites Exchange.

The airline still has a long way to go, but progress so far was encouraging, said Aly Khan Satchu, a Nairobi-based independent trader and analyst.

"It's a big, big task. It's like trying to navigate and turn an oil tanker. You are not going to get a quick result here. But from what I see, traffic numbers were up," he said.

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