Economy

KQ passenger numbers remain flat on euro crisis

Kenya Airways passenger traffic in the second quarter to September was unchanged compared to last year in what is set to delay the quick recovery of the national carrier after a flat quarter one.

Data for the three months show that passenger numbers remained at just over one million as lower traffic on European, Africa, and domestic routes offset the 16.5 per cent growth in Asian routes.

Analysts said that the flat performance in the six months to September together with costs linked to the layoff of 578 workers will hurt Kenya Airways half year profits which will be unveiled on Tuesday.

“I will be surprised if it posts a profit,” said Mr Eric Musau, an analyst at Standard Investment, in a recent interview. “It’s been a challenging period for the airline, what with the flat element on passenger numbers and the general industry.”

This kind of outlook points to delay in the turnaround of the firm, which reported a net profit of Sh1.7 billion in the year to March compared to Sh3.5 billion the previous year, mainly due to expensive labour and fuel.

KQ’s share price has fallen by 46 per cent in the past year to Sh12.45. Passenger numbers to Amsterdam, London, and Paris fell 15 per cent in the three months to 134,214 as Europe’s economic woes continue to hurt demand.

It has cut capacity on European routes, which account for about 26 per cent of KQ’s revenues, which also saw passenger numbers drop to 89,852, compared to 108,835 in a similar quarter last year.

According to the International Air Transport Association (IATA), traffic growth for Europe has remained flat since the beginning of this year in line with the economic pessimism on the continent.

However, traffic to the Middle East and Asia jumped 16.5 per cent to 155,940 travellers as new destinations such as New Delhi and Jeddah were launched.

The Middle East and Asia routes account for 19 per cent of the carrier’s revenues.

African routes, which account for half of KQ’s sales, recorded a 0.5 per cent drop of passengers despite the growth of 2.9 per cent in quarter one.

Traffic on domestic routes edged down by 0.4 per cent to 202, 112 travellers, the airline said.

The airline has hinged its growth plan on spreading its reach to more African cities and increasing frequencies in exiting and lucrative routes on the continent.
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