[2008-09-25]  Weak Shilling Weighs On KQ

Shareholders of national carrier Kenya Airways meet tomorrow for their Annual General Meeting at a time when high fuel prices and a weak shilling threaten to eat further into the airline's profitability.
The Kenya shilling is currently trading at low of Sh72-73 against the dollar after losing almost Sh10 over the past two months, while the price of crude oil has edged upwards to trade well past a $100 per barrel early in the week.
The two factors were some of the major contributors to the airline's decline in its profit margin for the year ending March 2008, with its pre-tax profit declining from Sh5.9 billion to Sh5.5 billion.
The rising cost of fuel and the weak shilling adds to the airline's challenges as it grapples with increased competition from low cost carriers, both in the domestic market and the region where the carrier has had a dominance.
The post-poll violence impacted negatively on the company's performance with the cancellation of booked flights as visitors avoided travelling to Kenya.
The cancellation saw the company suspend its Nairobi-France route in February 2008. Operations to the Charles De Gaulle International airport resumed in June 2008.
The resulting reduced capacity saw the company loss seven per cent of its cargo revenue. The airline however managed to fly more passengers in the year to March 2008 (over 2.7 million) compared to the 2.6 million passengers it flew in March 2007.
The cargo volume also rose by about 2 million kilograms from 60.9 million kilograms to 62.6 million kilograms
The two factors were some of the major contributors to the airline's decline in its profit margin for the year ending March 2008, with its pre-tax profit declining from Sh5.9 billion to Sh5.5 billion.
The rising cost of fuel and the weak shilling adds to the airline's challenges as it grapples with increased competition from low cost carriers, both in the domestic market and the region where the carrier has had a dominance.
The post-poll violence impacted negatively on the company's performance with the cancellation of booked flights as visitors avoided travelling to Kenya.
The cancellation saw the company suspend its Nairobi-France route in February 2008. Operations to the Charles De Gaulle International airport resumed in June 2008.
The resulting reduced capacity saw the company loss seven per cent of its cargo revenue. The airline however managed to fly more passengers in the year to March 2008 (over 2.7 million) compared to the 2.6 million passengers it flew in March 2007.
The cargo volume also rose by about 2 million kilograms from 60.9 million kilograms to 62.6 million kilograms

Source: NATIONMEDIA