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30 July 2015
- From the section Africa
One of Africa’s largest airlines Kenya Airways has announced its biggest ever annual loss.
It has partly blamed the $290m (£188m) shortfall on a decline in Kenya’s tourism sector.
Some countries had issued travel advisories warning about terror threats in certain areas.
Finance Director Alex Mbugua also told investors that the airline has been hit by competition from Gulf carriers, reports the Reuters news agency.
Competition from within the continent is also a factor, with Ethiopian Airlines becoming a major regional rival.
Losses were forecast but these were “much worse that they were expected to be”, African Aerospace magazine editor Alan Peaford said.
Tourism numbers are down because of the attacks in Kenya by Somalia-based militants al-Shabab, he added, but Kenya Airways has also been late in responding to the challenge of Ethiopian Airlines.
Kenya Airways moved to upgrade its aeroplanes ordering its first Boeing 787 Dreamliners in 2013, some two years after Ethiopian Airlines.
But the timing was unfortunate as it coincided with the tourism slump and the “growth of the fleet… was not matched by revenue growth,” the airline’s Mr Mbuga acknowledged.
As a state-owned company Ethiopian Airlines does not publicly declare its profits or losses, making it hard to draw a financial comparison between the two airlines.
Kenya Airways has also been hit by insuring itself against fuel price rises at exactly the time when prices have been falling.
The airline is now looking for a $200m loan to help it through this period.
In June, the UK government lifted its warning against travelling to part of Kenya’s coast, including Mombasa.
