Kenya Airways (KQ) half year profits after tax to September 30, 2008 fell 62.7 per cent to Ksh736 million ( USD 9 million with an operating margin of 4.7 per cent compared to KShs 1,972m (USD 25 million) and an operating margin of 11.3 per cent during the corresponding period last year.
The airline blames high fuel costs, the post –election violence experienced in Kenya that forced the economy stagnate in the first six months of 2008 and scared away tourists during the period January to May, for the decline.
Releasing the results, Group Chairman, Mr Evanson Mwaniki said the post election violence experienced in Kenya at the beginning of the year adversely impacted the first half of the financial year (April to September) which coincides with the peak season in the industry. “However, the country has realised a marginal recovery in the tourism industry and the airline has managed a paltry growth in the passenger traffic over prior year,” he added.
Royal Dutch Airlines KLM owns 26 per cent of the carrier while the Kenya Government owns 23 percent. The other 51 per cent is held by individuals and companies from mainly Kenya, Netherlands, Tanzania, Uganda, South Africa and Europe.
Privatised in 1996, KQ is listed in three regional stock markets- Nairobi, Dar es Salaam and Kampala and is one of Africa’s leading carriers.
Despite the difficult economic climate, both capacity measured in terms of ASK’s and passenger traffic for the first half increased marginally by 2.0 per cent, he said. “The passenger yields in US Cents improved by 10 per cent
But the improvement reduces to 4.4 per cent when translated into Kenya Shillings, primarily due to the weaker US Dollar in the period,” Mwaniki said in a statement released at an investors briefing held at a Nairobi hotel.
He said areas of high passenger traffic growth included West and Central Africa with 20 per cent mainly due to additional frequencies to Lagos, Kinshasa and Accra. Far East growth of 19 per cent was driven by the introduction of three weekly Bangkok-Guangzhou services.
Modest growth of 8 per cent was realised in Southern Africa and
5 per cent in the Middle East regions. Europe suffered a decline of 6 per cent, mainly impacted by the post election crisis prompting temporary suspension of Paris operations and reduction of capacity to Amsterdam. East Africa marginally declined 2 per cent while Northern Africa was largely unchanged.
“Domestic Kenya declined 9 per cent due to reduced travel within the country and ex-European feed into Kenya. With an overall ASK growth of 2 per cent and RPK growth of 3.4 per cent, the average Cabin Factor moved from 72.7 per cent to 73.8 per cent,” noted the chairman.
Cargo volumes were at par with prior year, but at an improved yield of 27.9 per cent over the prior year. High Cargo growth in tonnes was achieved in Northern Africa 18 per cent and Middle East 14 per cent. Modest growth was achieved in Southern Africa 8 per cent and West and Central Africa at 4 per cent. European tonnage declined by 8 and Domestic Kenya by 16 per cent based on similar reasons as mentioned above.
Mwaniki said KQ continues to strategically focus on improving its operational integrity, through investment in staff training, improvement of systems and fleet modernisation.
Globally, the aviation industry has continued to face major challenges arising from fuel prices which hit an all time high of USD 147 per barrel in July 2008. This has resulted in a majority of airlines posting losses whilst pushing others into filing for bankruptcy.
The escalating fuel prices have also seen the collapse of several airlines and IATA, the global industry body, projects airlines worldwide will make a combined loss of USD 5.2billion (USD65 million) in 2008 and USD 4.1billion (USD51 million) in 2009.