Kenya Airways slipped to a net loss of KShs7.9 billion ($91 million) for the year to March 2013 as demand and yields were hit by geopolitical uncertainty, compounding high fuel prices and the slow European economy.
"Although the larger African markets remained buoyant, Kenya witnessed constricted passenger traffic," the airline says in its full-year results statement today. "The causal factor for this lull was the advisories issued against travel to the country by key market sources in the West due to fears of retaliatory attacks from the Al-Shabbab terror group, together with the unpredictable electioneering process." Elections in Kenya, the first since those in 2008 marred by unrest, were held in March and passed without major incident.
Turnover at the carrier was down KShs9 billion at KShs98.9 billion, on constrained passenger traffic and "immense pressure" exerted on yields. Passenger traffic fell 3.6% on flat capacity, largely because of reduced traffic from Europe. "Unprecedented competitive pressures drove passenger yields down, with the network average declining by 1.3% against last year," the airline adds. Passenger revenues were down nearly KShs 10 billion, as the stronger Kenyan shilling also had an impact.
While the airline added flights in India last year it cut capacity on its European operations and dropped flights to the Omani capital Muscat, Jeddah in Saudi Arabia and N'Djamena in Chad.
The loss in 2012/13 compares to a profit of KShs1.6 billion in the previous year. The airline points to positive economic trends in its focus markets of Africa, Asia and the Pacific, also note that the carrier has taken "solid steps" to address the losses. "The second half results, though still negative, are much better than those of the first six months," the airline says.