Tuesday, November 6, 2012

■ KENYA: Kenya Airways issues profit warning after taking $55million hit.

Kenya AirwaysKenya Airways (KQ) has posted its unaudited, consolidated results for H1 (First Half) of its 2012/2013 Financial Year ending 30 September 2012 with a net loss of USD55.2million (KES4.788billion) being declared.

The airline attributed the loss to drops in the number of passengers flown, revenue per seat kilometre, as well as passenger yields, as found in its Operations Report for Q2 2012 (July - September). On top of reduced number of passengers and high fuel prices, the situation made worse by an unfavorable USD/KES exchange rate. The Kenyan market itself was negatively impacted by cautionary travel advisories issued in the wake of violence in Mombasa and the war in Somalia, which contributed to reduced passenger numbers to Kenya.

Kenya Airways H1 2012 Financial Results
Kenya Airways H1 2012 Financial Results (Kenya Airways)
Other costs included USD9.7million (KES826million) worth of one-off costs related to job cuts, which in the long run, are expected to save the airline USD14million (KES1.2billion) a year.
"We were unable to predict what was happening in the market place correctly, and this is one of the reasons we had to pull out of daily London flights. We also suspended operations to Rome, Muscat and Zanzibar in order to reduce the loss making routes,” Kenya Airways chief executive Titus Naikuni said in a press conference after releasing the results.
Source [The Nation, Kenya]

As a result of its negative performance, KQ has been forced to issue a profit warning for its full year results:
Though the second half is expected to be much better, we believe that it will not be able to lift us past the USD 70.1million (KES6 billion) comprehensive loss we have made in the first half. So based on capital markets guidelines, we issue a profit warning because we believe our full year results will be lower by more than 25% compared to last year,” the airline’s chief finance officer Alex Mbugua said.