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KQ records Shs29.7B pre-tax loss for the year ending March 31st

Kenya's National carrier Kenya Airways has posted a record breaking 29.7 billion shilling in loses before tax for the financial year ending 31st March 2015.This is a 51 percent drop compared to last years results where the airline recorded a loss of 4.8 billion shillings.

According to the CEO Mbuvi Ngunze, the losses have been attributed to flat revenues, a large increase in fleet cost and an unrealised loss in the hedge


The sub-Saharan Africa’s third-largest carrier, said it will seek a $200-million loan and sell assets after posting the biggest loss in the nation’s corporate history.

The stock plunged to an 18-year low, to 5.60 shillings by 2:25 p.m. in Nairobi, heading for the biggest decline on record and to the lowest level since May 2003.
The airline has appointed African Export-Import Bank as its financial adviser to raise long-term capital and refinance the business, Chief Executive Officer Mbuvi Ngunze told reporters Thursday in the capital, Nairobi. 
It expects to raise a further $100 million from the sale of seven of its 52 aircraft and land in the city, Chief Financial Officer Alex Mbugua said at a briefing.
The company reported a loss of 25.7 billion shillings ($252 million), compared with 3.38 billion shillings a year earlier, as it also faced increased competition and booked a 5.8 billion-shilling loss for “hedging adjustments,” 5.6 billion shillings in impairment adjustments and 2 billion shillings of costs related to the depreciation of some of its aircraft.
That translates to a haemorrhage of $690,000 every day.
“Those results are clearly a watershed for KQ and for this country,” Ngunze said, referring to the airline’s marketing code.
The management blamed the big loss to exchange rate volatility, intense competition especially from Middle East carriers as well as terrorism that attracted travel advisories.
It also lost money on the oil price hedges.
Tourism to Kenya has plunged in the past year after attacks by Islamist militants, including a raid in the coastal town of Mpeketoni in June 2014 that left at least 60 people dead. 
The number of visitors dropped 25% to 284,313 in the first five months of the year, according to the Kenya Tourism Board.
“We had growth of the fleet which was not matched by revenue growth,” Mbugua said. The carrier in 2013 started purchasing Boeing 787 Dreamliner planes, which are seen as more efficient.
The airline, part-owned by AirFrance-KLM, has also received a $420 million bailout from government.
Its share loss compares with a 6.6% decline in the Nairobi Securities Exchange All Share Index over the same period.
“From an investor’s point of view, this is certainly a worrisome situation” because the company hasn’t given any guidance on how it will reverse the loss, said Eric Musau, an analyst at Standard Investment Bank. 
“They don’t seem to have visibility of how they’ll turn around the airline.” 

Sources: MAIL & GUARDIAN AFRICA, mediamaxnetwork 


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