Kenya Airways starts turnaround plan as H1 losses narrow
12 November 2015, 12:24
Nairobi - Kenya Airways has started implementing a turnaround plan following three-and-a-half years of losses, the chief executive said on Thursday, after the carrier announced a slightly narrower pretax loss for the six months to September.
The airline, part-owned by Air France KLM, reported a pretax loss 11.856 billion shillings ($116.1 million) for the period, helped by lower fuel costs. Losses were 12.5 billion shillings in the same period a year earlier.
A series of Islamist militant attacks in Kenya in the past two years has hurt the country's tourism industry, which hit the airline's revenue after it had bought expensive new planes.
"The board has approved our plan to close the profit gap and we are starting to execute," Chief Executive Mbuvi Ngunze told an investor briefing.
The airline, in which the government holds a 29.8 percent stake, had hired consultants McKinsey and Seabury to help draw up the turnaround strategy.
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Finance Director Alex Mbugua said lower fuel costs had helped narrow losses in the first half of the carrier's financial year. "The fuel costs have come down significantly," he said.
But he said those savings were partly offset by a revaluation of the airline's dollar denominated loans that led to foreign exchange losses. Kenya's shilling has been weakening this year, partly due to global dollar strength.
Fuel costs fell 37.4 percent during the period to 13.58 billion shillings, the finance director said, adding the actual savings from price movement of oil was 7.95 billion shillings.
Turnover was flat at 56.72 billion shillings, he added.
To keep it in the air, Kenya Airways said in early October it had received the first half of a $200 million bridging loan from Afreximbank. It said at the time that it expected the second tranche later in the month.
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