The Nation (Nairobi)
Joseph Bonyo
30 October 2009
Nairobi — National carrier, Kenya Airways, has reported a 17 per cent increase in profit before tax for the first half of its financial year, going against the trend internationally, where airlines are reporting huge losses.
The airline reported Sh1.2 billion in the period ending September 30, compared to the Sh1 billion it realised over a similar period last year.
It reported a historic Sh5.6 billion loss in the year ended last March, arising from oil hedging deals. Its return to profitability comes as a relief to its battered share, which yesterday remained stuck at Sh24.50.
"Compared to other airlines in the industry, our performance is much better and we expect to do even more in the next six months," said board chairman Mr Evanson Mwaniki.
According to chief operating officer, Mr Bram Steller, the increase is attributed to low fuel prices that helped cut the fuel cost by Sh9.1 billion over the period.
In the concluded period, fuel costs represented 25 per cent of the airline's total operating costs, compared to 40 per cent last year.
However, the listed airline had to contend with a 20 per cent cost increase on its books, as a result of an industrial action by staff in August. The three-day strike by the workers resulted into an estimated Sh618 million hit, as the negotiated pay rise had to be backdated.
"We will still have to live with this increase in our overhead costs in the days to come," said financial director Mr Alex Mbugua.
Turnover dropped from Sh34 billion in the six months of 2008 to Sh33.4 billion in the current period. This was attributed to a marginal, increase of 1.4 per cent in passenger revenue. Cargo and mail recorded a 16 per cent drop, to record Sh2.5 billion in the six months under review.
The fall in revenue by the airline was largely occasioned by global crisis that is estimated to result to Sh11 billion losses in the industry. This is reflected in reduced passenger and cargo volumes.
Going forward, the airline expects to introduce cost-cutting measures to increase its cash position against a backdrop of improving their revenue.
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