Kenya Airways announces 7.9 billion KShs loss, says recovery well underway

KENYA AIRWAYS PRESENTS FULL YEAR RESULTS

(Posted 14th June 2013)

Kenya Airways’ Board of Directors and top management yesterday morning presented their annual results to shareholders, invited guests and media representatives at the InterContinental Hotel in Nairobi.

Seen in isolation the balance sheet presented would indeed make grim reading, showing a loss of some Kenya Shillings 7.9 billion vis a vis a profit during the previous financial year of Kenya Shillings 1.6 billion, but considering the trend of the preliminary results of the first half of the financial year, which covered the period 01st April 2012 to 30th September 2012, it suggests that the underlying issues causing this reverse in fortune have been dealt with.

Kenya Airways’ statement towards that end reads as follows: ‘The financial year 2012-2013 was characterized by harsh economic and geopolitical conditions that adversely impacted on the performance of Kenya Airways. Commercial aviation worldwide was negatively affected by the sustained underperformance of the European economy as well as volatility in fuel prices. Although the larger African markets remained buoyant, Kenya witnessed constricted passenger traffic. The causal factor for this lull was the advisories issued against travel to the country by key market sources in the West due to fears of retaliatory attacks from the Al-Shabab terror group, together with the unpredictable electioneering process. In spite of the adversities mentioned above, Kenya Airways expanded its footprint into Delhi and Kilimanjaro during the first half of the year, and later re-opened Eldoret in October. However, in a bid to minimise losses the airline cut back capacity offered to Europe and suspended operations into Muscat, Jeddah and N’Djamena. The group achieved a turnover of KShs 98.9 billion, down from KShs 107.9 billion realized last year. This decline is largely attributed to constrained passenger traffic together with immense pressure exerted on yields. This resulted in KShs 7.9 billion loss after tax compared to 2011-2012 profit of KShs 1.6 billion.

The capacity put in the market place at 13,937 million Available Seat Kilometres (ASK) was flat compared to prior year. Passenger traffic declined by 3.6% to 9,579 million. Revenue Passenger Kilometres (RPK) on account of reduced passengers particularly those originating from Europe. Unprecedented competitive pressures drove passenger yields down, with the network average declining by 1.3% against last year. Passenger revenues at KShs 85.1 billion declined from KShs 95.2 billion achieved last year primarily due to depressed passenger loads, network-wide pressure on yields and stronger Kenya Shilling in the year. The passenger traffic growth trends in Middle East & Asia, Far East and Africa regions remained positive due to increased capacity made possible by either offering additional frequencies or operating larger aircraft. Additional uplifts to and from the Middle East and Asia was stimulated by the introduction of Delhi in India together with three additional weekly frequencies into both Mumbai and Dubai. The Far East destinations benefited from the operations of the larger B777 aircraft compared to the B767 which has 33% less capacity operated in the previous year. Traffic within Africa grew due to increased capacity. Additional frequencies were introduced to Juba; more wide body aircraft were flown into Kinshasa; and two extra weekly flights were scheduled to Dakar via Abidjan. The capacity offered into Europe was reduced by 22% compared to last year in order to minimise losses occasioned by low seat occupancy levels. Passengers transported within Kenya remained at last year’s levels despite the loss of traffic from major feeder markets in Europe. This is mainly attributable to increased point to point travel within Kenya.

With the mentioned two key factors responsible for the FY 2012/13results now largely out of the way, one, the elections peacefully concluded in Kenya and two, Al Shabab driven out of their strongholds in Somalia, that country is now undergoing a period of pacification and is seeing the start of a rebuilding process which will ultimately benefit Kenya too. Kenya Airways will be holding their Annual General Meeting on the 26th September at the Bomas of Kenya in Nairobi at which time the first preliminary data will be available of the airline’s performance during the first half of the current financial year, giving a clear indication if the projected recovery has indeed taken root and the carrier can return to profitability once again. Watch this space for regular and breaking news from East Africa’s vibrant aviation sector.

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