High fuel costs steer KQ into Sh4b losses

Kenya Airways CEO Sebastian Mikosz' (Left) and Chairman Michael Joseph (Right) during the launch of Kenya Airways direct flights to New York at Raddison Blue Hotel. [Edward Kiplimo/Standard]
National carrier Kenya Airways has posted a Sh4 billion net loss for the first six months of this year.

This was on the back of increased operational costs as the airline struggled to reverse its loss-making streak.

The national carrier cited volatility in fuel prices for the loss as total operating costs grew four per cent to hit Sh53 billion for the half-year ended June 30.

This pushed the airline’s operating loss up by 30 per cent to Sh1 billion from Sh732 million recorded in a similar period last year.

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“Fuel price volatility continues to be our biggest challenge, and the price per barrel has been on an upward trend since the beginning of this year, closing at $74 as at June 30, 2018,” said the airline’s Chief Executive Sebastian Mikosz.

Mr Mikosz further explained that the 12 per cent increase in global fuel prices over the first half of this year contributed heavily to the firm’s operational loss since fuel cost constitutes up to 41 per cent of overall costs.

Despite passenger numbers increasing by 6.6 per cent to 2.3 million, and a 24 per cent increase in cargo revenue, the airline is still struggling to build its revenue basket.

Net cash generated from operating activities shrank to Sh345 million during the period under review, from Sh2.1 billion made in a similar period last year.

The results further show that the national carrier still has a long way to go in turning its fortunes around.

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Last year, Kenya Airways booked Sh10.2 billion in operating loss, halving the Sh26 billion loss made in 2016.

Mr Mikosz was, however, optimistic the strategic plan to improve the airline’s financial position would bear fruit in the long run.

“We are in advanced stages in getting ready for the direct flights to the US and are selling between 800 and 900 tickets each week, with a surprise uptake from passengers in the Canadian market flying through the US on to Kenya,” he said.

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Kenya Airwaysnet lossKenya Airways CEO Sebastian Mikosz'Kq