Kenya Airways Sees Airport JV Improving Facility, Revenue

NAIROBI (Capital Markets in Africa) – A proposed joint venture between Kenya Airways Plc and the East African nation’s airports manager to run the capital’s main airport will improve the facility and provide more income for the airline, its chairman said.

The carrier partially owned by Air France-KLM is in talks with the Kenya Airports Authority to jointly oversee Nairobi’s Jomo Kenyatta International Airport. KQ, as the airline is also known, currently pays landing fees to KAA.

“JKIA is a profitable business on its own, so KQ will make money from landing fees once the JV takes off,” Chairman Michael Joseph told reporters during a first-half earnings presentation.

The KAA has been upgrading its biggest airport ahead of KQ’s planned direct flights to the U.S. scheduled to begin in October. The airline targets a load factor — a measure of the percentage of seats on planes filled by paying passengers, which relates closely to profitability — of between 65 percent and 70 percent for the first half of 2019 from the flights. It’s already seeing a “very good response” from the Canadian market, he said.

The company plans to introduce as many as three new U.S. routes by the end of the year and has a code share agreement with Delta Air Lines Inc. It also plans a partnership with American Airlines Group Inc. that will require U.S. government officials to fly KQ, Joseph said.

KQ posted a narrower loss of 2.96 billion shillings ($29.4 million) for the six months through June. The company will implement a “vanilla” fuel-hedging strategy in the second half, whose impact will be felt in the full-year earnings and in 2019, Chief Executive Officer Sebastian Mikosz said. Fuel costs jumped 16 percent in the first half, he said.

Source: Bloomberg Business News