Kenya Airways Sees Revenue Decline After Protracted VoteBy
Dispute over presidential vote had ‘big impact,’ CEO says
Carrier is in midst of turnaround after record loss last year
Kenya Airways Ltd. expects second-half revenue to decline after violence during the country’s protracted presidential elections scared off passengers, Chief Executive Officer Sebastian Mikosz said.
Travelers canceled bookings as a rerun of the vote and court disputes over the outcomes stretched over three months, Mikosz said in an interview Wednesday in the Mauritian capital, Port Louis. The impasse triggered violence that left at least 80 people dead, according to human-rights groups.
“We forecast a big impact in terms of revenue,” Mikosz said. “We are going to have a huge impact on the second half due to the fact that there were several weeks of uneasiness.”
The drop in income comes as Sub-Saharan Africa’s third-biggest carrier pursues a turnaround plan to return to profit after it posted a record loss last year. The airline last month completed a reorganization that resulted in Kenya’s government increasing its stake to 48.9 percent from 29.8 percent, and domestic lenders owning 38.1 percent after a debt-for-equity swap.
KQ, as the company is known, has begun talks with lenders about renewing its hedging strategy to offset the impact of rising fuel costs, which represent about a third of the airline’s total expenses. Oil prices are heading for a second yearly gain as the Organization of Petroleum Exporting Countries and its allies including Russia extend output cuts through the end of 2018.
“We have been using the hedging products in the past,” Mikosz said. “The products expired roughly three months ago. What we want, now we are in post-restructuring, is to start talking hedging again.”
Kenya Airways last month posted a first-half loss of 3.8 billion shillings ($37 million), compared with 4.78 billion shillings a year earlier, after revenue dropped 0.4 percent to 54.5 billion shillings.
Kenya Airways shares fell 0.3 percent to 17.70 shillings on Thursday, its first decline this month. The stock has tripled in value this year after a share split last month.
Mikosz was in Mauritius to sign a letter of intent with Air Mauritius Ltd. to boost collaboration between the two airlines.