Business
Kenya Airways posts $56 million half-year loss
Kenya Airways on Monday announced a KSh4.8 billion (US$ 56 million) half-year loss, the second highest in its history, and followed up the bad news with a warning to investors that the persistence of the euro zone crisis would leave the full year result at less than a quarter of last year’s outcome.
The airline, which has recently been in the news over an acrimonious retrenchment programme involving 599 employees, said Europe’s debt crisis had hit its operating environment and depressed demand for travel in key markets that account for nearly a third of the revenue.
The operating environment was also poisoned by a strengthening of the Kenyan shilling that left the carrier with big exchange rate losses and lower yields from depressed ticket prices in a highly competitive market, said Titus Naikuni, the chief executive.
Revenues dipped by KSh5.1 billion (US$59.7 million) to KSh49.8 billion (US$584 million), and passenger traffic, which account for 90 percent of the business dipped 10 percent to KSh43.6 billion (US$511 million) causing a net loss of KSh6.8 billion (US$79.7 million) from a net profit of KSh2.0 billion (US$23.4 million) in the first six months last year.
“We believe our profit will be less than 25 percent of the previous year’s so we have issued a profit warning,” said Mr Alex Mbugua, the airline’s financial director, during an investor briefing. “We expect a better second half but we do not believe it will be sufficient enough to uplift the business form the first half impact.”
Kenya Airways closed the first half of the year with a KSh2 billion (US$23.4 million) exchange rate loss arising from a stronger shilling that stayed at an average of 84 units to the dollar compared to an average of 88 units to the dollar last year.
The strength of the shilling is critical to the airline’s performance because a large portion of its revenue is dollar denominated, exposing it to losses during conversion.
