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Kenya Airways Reports Second-Half Loss as Attacks Scare Visitors

Kenya Airways Ltd., sub-Saharan Africa’s third-biggest carrier, posted a second-half loss after attacks by Islamist militants in the country and a fire at the main airport in the capital scared off visitors.

The loss totaled 3.77 billion shillings ($43 million) in the six months through March, compared with 3.08 billion shillings in the same period a year earlier, according to Bloomberg calculations using Kenya Airways’ published financial results. For the full-year, the loss was 3.38 billion shillings, compared with 7.86 billion shillings in 2012, the company said in a statement. Profit in the first half was 384 million shillings, according to results published in November.

“During the second half, the company made a loss largely driven by reduced passenger revenues,” the company said. It cited a fire at Jomo Kenyatta International Airport in August that burned down the international arrivals terminal, an attack on the Westgate Mall in Nairobi that killed at least 67 people, and travel advisories by foreign countries including the U.S.

Kenya has faced a growing number of attacks since it deployed troops in neighboring Somalia to fight al-Shabaab, the al-Qaeda-linked group that’s trying to overthrow the government and establish an Islamic state. The raids have dented Kenyan tourism, with arrivals to the East African country falling to 1.4 million last year from 1.7 million in 2012. The industry is the nation’s second-biggest source of foreign currency, generating $1.1 billion in 2013.

Kenya Airways shares fell 5.6 percent to 10.90 shillings by the close in Nairobi, the biggest decline in a year. The stock has fallen 16 percent this year, underperforming the Nairobi Securities Exchange All-Share Index (NSEASI), which has gained 9.7 percent over the same period.

Security Concern

“The security situation in Kenya remains a concern and this has negatively impacted on traffic, especially from Europe,” the company said. “Measures are being taken by management to rationalize capacity in affected markets.”

The carrier plans to focus on developing its markets in Africa to capitalize on increasing trade within the continent and tap growing tourist demand in Asian countries including China, Chief Executive Officer-designate Mbuvi Ngunze said in an interview at the results presentation.

Kenya Airways will also take delivery of five more Boeing Co. (BA) Dreamliner aircraft by October as part of a fleet-renewal program, which the company expects will “improve the customer experience.”

To contact the reporter on this story: Charles Wachira in Nairobi at cwachira@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net Paul Richardson, Sarah McGregor

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