Kenya Airways flies into more losses
Kenya national carrier Kenya Airways has reported a record $258million net loss in its 2016 full year results in what is attributed to foreign exchange losses and increased cost of borrowing.
According to the airline’s management the fluctuations in oil prices during the year unfavourably impacted the group’s fuel hedges resulting into an additional sh5 billion in realized fuel hedges losses.
“The operating loss improvement of $122million was underpinned by a growth in cabin factor to 68.3 per cent, with an increase in passenger numbers from 4.18 million to 4.23 million, a reduction in direct operating costs, overheads and fuel and an increase in fleet costs,” said Mbuvi Ngunze Kenya Airways Chief Executive.
The firm however recorded a 75 per cent reduction in operating loss from $16million in 2015 to $4million in the period under review.
Ngunze says that excluding one-off impacts related to asset sales, compensation for late delivery of new aircraft, write-offs, impairments and provisions, the group broke-even at operating loss level, an improvement of $11million, while loss before tax improved by $2.5 million
“The results were achieved in a tough aviation context, in which airlines continue to be weighed down by wild currency fluctuations, volatility in fuel prices, and a changing commodity price environment.
An industry forecast by IATA indicates that African airlines will continue to be in negative profit territory in 2016, despite overall improvement in performance. In conjunction with the overall trajectory of the results, a number of other key performance indicators for Kenya Airways also showed marked improvements,” he explained.
The firm is currently working on a turnaround strategy that includes staff right sizing, and rationalising its fleet through selling off and leasing some of its surplus aircraft.
The airline is set to send home up to 600 employees and has already sent home 80.