Home news Kenya airways announces $74million loss, New York route not lucrative – CEO

Kenya airways announces $74million loss, New York route not lucrative – CEO

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Kenya Airways staff
Kenya Airways staff

Kenya Airways announced its performance for the 2018 financial year this week.

Geneva, one of Kenya Airways new destination
Geneva, one of Kenya Airways new destination

According to its Chairman, Michael Joseph, 2018 was a challenging year for the airline.

It posted a pretax loss of 7.59 billion Kenyan shillings ($74.93 million) in the 12 months ended December. This is a decrease from the loss of 9.44 billion Kenyan shillings reported from the previous financial year.

The Airline’s chief executive Sebastian Mikosz attributed the loss to high fuel costs, personnel and the cost of aircraft.

“Fuel is our greatest challenge and this will be for a while. Oil prices are up by 30%. Fuel represents over 40% of our direct operating costs.”

However, it is looking at other avenues to minimise the loses.

It wants to run the main airport in Nairobi to boost its cash flow and allow it to buy new planes.

The proposal, backed by the cabinet last year, is in the hands of parliament’s transport committee which has to approve it before it is implemented, Joseph said.

“We started mitigating this risk by implementing a new hedging policy with minimal risk. Kenya Airways offers other services, technical and ground handling to domestic, regional and international customers.”

Despite the loses, the airline recorded an increase in revenue within the same period.

Revenue increased by 3.1 percent due to increased passenger traffic and overall yield improvement.

“We have however seen growth in passenger numbers. Management team have done a great job under the circumstances and thanks to the board for massive support. KQ is not just an airline but a strategic asset for the country. We should be proud of what KQ has done for Kenya & support, we can help improve the country’s GDP and create employment opportunities despite our challenges. We need support from media, investors and government,” Chairman Michael Joseph.

The growth in passenger numbers was mainly boosted by its New York route introduced last year.

“We carried 15,000 passengers with a load factor of 64.6% to and from NYC in Nov to Dec 2018. New York is symbolic.”

However, the performance of the route is still below their expectations. KQ was forced to adjust the number of its flights to New York from daily to five times a week.

“I do not consider it to be a lucrative route. There is nothing lucrative about flying to New York,” said Kenya Airways CEO, Sebastian Mikosz says.

“This route is challenging, but it allows us to position KQ and Kenya differently. We are flying 5 weekly frequencies, we adjusted this to cater to the seasonality of the route.”

Last year, KQ also added Mauritius, Libreville and Mogadishu to its destinations.

It has further added Rome and Geneva to its routes.

“Whilst the company might still be struggling, we are still moving in the right direction. Growth remains our focus, we’re back to flying to Rome, & have added a new route to Geneva. Passengers from Italy who wish to connect to Malindi have an added advantage to continue directly to the coastal town with 4 weekly frequencies from 10 Jun 19.”

Meanwhile, the carrier expects to add two Boeing 787 Dreamliner planes back to its fleet later this year.

The planes had been leased out to Oman Air, as the then cash-strapped Kenya Airways trimmed its fleet size to stay afloat.

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