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Kenya’s prolonged political crisis is having a “significant” impact on Kenya Airways’ crucial intra-African trade, chief executive Sebastian Mikosz said, as the airline reported a slight fall in revenue for the first half the 2017/18 financial year compared to the same period last year.
Mr Mikosz said long-haul traffic, particularly the key tourist market, remained robust but domestic and regional business had suffered “a huge drop” due to the supreme court nullifying the result of the August presidential election and ordering a repeat vote.
The announcement came a day after the heavily-indebted airline completed a complex debt restructuring that saw the Kenyan government’s stake rise from 29.8 per cent to 48.9 per cent and local banks swap $167m of debt for a 38.1 per cent stake.
Mr Mikosz declined to say how much the politics had affected overall revenue in the six months to the end of September but said east African and domestic bookings were down by “more than 50 per cent”.
This included Jamobjet, Kenya Airways’ domestic budget airline subsidiary, cancelling up to 50 per cent of its weekly flights in the final weeks of the reporting period.
Politics is likely to continue to affect Kenya Airways’ revenue for the next reporting period because the result of the October 26 repeat election has been challenged in the court. The judges are due to deliver their verdict on Monday.
Forward bookings are flat for November but marginally up in December and January compared to 12 months ago, the airline said.
Despite the fall in revenue from Ks54.75bn ($528m) to Ks54.5bn for the six months, Kenya Airways cut its loss before income tax by 20 per cent to Ks3.8bn from Ks4.7bn in 2016. This was driven by a 52 per cent rise in operating profit to Ks1.4bn and a 1.5per cent reduction in operating costs.
The latter was greatly helped by lower fuel costs, Mr Mikosz said, adding that these had risen from an average of $42 per barrel to $62 per barrel in recent weeks.
Michael Joseph, Kenya Airways chairman, said the airline was “in a good position” now that the restructuring had been completed but that the turnround was far from complete.
“This is a long, hard road,” he said. “It’s probably going to be a six-to-12 month journey, if not longer before we see the results.
“Hopefully we won’t have another presidential election so we can get on with life.”
Mr Mikosz said the main operational priority for the next year would be to start non-stop flights to the US. The government has said it expects these to start in the middle of next year.
The airline is also looking to “strengthen” its joint venture with Air France-KLM, Mr Joseph said. Air France-KLM is investing $76.m, in phases, in Kenya Airways as part of the restructuring but saw its stake fall from 26.7 per cent to 7.8 per cent.