Better times ahead, says Kenya Airways
Nairobi — Kenya Airways expects a much better performance in the second half of this year, helped by an improved business environment. Prolonged election uncertainty in Kenya in the second half of 2017 hit passenger numbers.
The airline, which is 7.8% owned by Air France KLM, reported that its pretax loss narrowed to Ks3.99bn ($40m) for the first half of 2018, from a loss of Ks5.77bn during the same period last year.
In 2018, Kenya Airways 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’s 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 was held. President Uhuru Kenyatta was elected for a second term and was sworn in in late November.
"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," CEO Sebastian Mikosz told a news conference on Wednesday.
Kenya Airways is showing signs of recovery after it came close to collapse in 2017, 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% to Ks52.19bn, but total operating costs rose 4% to Ks53.22bn because of rising global fuel prices.
The airline has said it would resume aviation fuel hedging in the second half after price volatility drove up its costs. 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 rose 7% in the first half to 2.3-million.
Kenya Airways, which plans its first nonstop flight to New York in October, said it is preparing to launch at least three new routes in 2019, with Europe, Middle East and Asia as a possibility, Mikosz said.
During the morning on Wednesday, Kenya Airways shares were trading up 2.36% at Ks10.85 a share on the Nairobi Securities Exchange.
The airline still has a long way to go, but progress so far is 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.