Kenya Airways Could Resume Fuel Hedging in the Third Quarter

NAIROBI (Capital Markets in Africa) – Kenya Airways Plc announced a return to a fuel-hedging strategy that it partly blamed for driving the company to record losses in recent years.

Fuel costs make up about a quarter of the airline’s costs, Chief Executive Officer Sebastian Mikosz told reporters in the Kenyan capital, Nairobi. KQ, as the company is known, abandoned fixed-price fuel contracts in 2016 when they locked it out of rock-bottom oil prices and caused it to post the biggest losses in Kenya’s corporate history.

“I’m absolutely confident that in the third and fourth quarter this year, Kenya Airways will start opening hedging policies again,” he said. “So you can expect some hedging disclosures next year.”

In a turnaround strategy that’s starting to bear fruit, Africa’s third-biggest carrier cut its full-year losses to 10.2 billion shillings ($101.2 million) in 2017, from a record 26.2 billion shillings a year earlier. The floundering airline cut staff numbers, gave up an expensive but valuable landing slot at London’s Heathrow airport and shrank its fleet.

The carrier partially owned by Air France-KLM prefers to extend sub-leases on two Boeing Co. Dreamliners to Oman Air instead of repossessing the planes, Chairman Michael Joseph said at the company’s annual general meeting on Friday.

KQ announced in March it would take back five jets, including three Boeing 777-300 aircraft sub-leased to Turkish Airlines, between September this year and December 2019. One of those aircraft is intended for a New York route that will be launched in October. Its shares were down 0.4 percent to 11.40 shillings at 1:25 p.m. in Nairobi.

Source: Bloomberg Business News