MIXED FORTUNES FOR NATIONAL CARRIER

Kenya Airways recorded an improved performance in the financial year 2013-14 thanks to the stabilisation of the Euro-zone economies, favourable prices of jet fuel and stable business environment in Kenya in the first half of the financial year. Though the airline posted a profit in the first half of the financial year, during the second half of the prior year, it made a loss largely driven by reduced passenger revenues.

 

 

In August 2013 a fire incident adversely impacted the traffic flow of transit passengers through Nairobi originating from other countries. The September 2013 terrorist attack at Westgate Mall in Nairobi followed by a series of other attacks in Kenya significantly eroded leisure travel from traditional markets. Then, travel advisories against travel to Kenya depressed travel.

 

An operating loss of Sh2.7 billion represents  a 70% recovery over last year’s Sh9.0 billion. The loss after tax of Sh3.4 billion is 57% better than previous year’s Sh7.8 billion. Turnover achieved in the year at Sh106.0 billion indicates an increase of Sh7.1 billion compared to last year, mainly from increased passenger revenues. Direct operating costs at Sh75.2 billion were lower than prior year by Sh1.9 billion driven mainly by savings in fuel from lower prices.

 

But as the national carrier continued to drive its market, fluctuating market coupled with civil unrest in some countries led to suspension of operations to countries like Libreville in Gabon; Bangui in Central African Republic; Ouagadougou in Burkina Faso and Cairo in Egypt. Later on, in 2013, the airline commenced operations to Livingstone in Zambia, Abu Dhabi in the United Arab Emirates and Blantyre in Malawi.

 

The national carrier is now on course with its fleet renewal and turnaround programme – the first of six B787-8 Dreamliner scheduled to arrive this year has already commenced operations into Paris. The airline expects to receive one Dreamliner each month from June to October 2014. The B767-300 fleet that is being replaced with the Dreamliners will be out of service by November 2014. The company also received its first B777-300 in November 2013 and expects a second and a third B777-300 in May and July. The fleet renewal programme is expected to improve the customer experience especially in the wide body fleet.

 

The security situation in Kenya remains a concern and this has negatively impacted on traffic especially from Europe. The opening of Terminal 4 at JKIA is also expected to enhance customer experience. Besides, work has commenced on a temporary terminal, International Arrivals and Greenfield terminal.

 

International Air Transport Association (IATA), in its latest forecasts, projects the industry profit at $18.7 billion for 2014 with a net margin of 2.5 per cent, due to strengthened demand from the developed countries whose reduced budgetary tightening and loosened monetary policies have boosted business confidence and international trade.

 

By Victor Adar

 

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