KQ expansion in Africa bears fruit

Un-hedged fuel

In the first two quarters of the financial year the airline saw its RPK drop by 4.7 per cent despite increased capacity while the cabin factor also dropped to 66 per cent form 73 per cent.

These factors along with increased competition in the market, leading to discounts, saw the airline record lower passenger and cargo yields that saw its operating profits reduce.

KQ’s revenues dropped by 1.7 per cent to Sh33 billion while its operating profits dropped by eight per cent to Sh162 million.

Despite the reduced revenues and operating profits, the airline posted a 17 per cent increase in pre-tax profits to Sh1.2 billion for the period ending September, 2009.

This was from gains of acquiring un-hedged fuel at market prices, which were lower compared to the prior period, leading to a direct saving of Sh5.7 billion.

As some hedges expired, the airline was able to get new ones at a cheaper price.

For the year ending March, 2009, the airline announced a loss of Sh5.6 billion mainly driven by new accounting standards that saw it book Sh7.5 billion in its financial statement from unrealised hedging positions.