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KQ Blames High Cost Of Fuel For Its Ksh7.59 Billion Loss

KQ CEO Sebastian Mikosz. [PHOTO/ COURTESY]

Kenya Airways (KQ) has blamed its Ksh7.5 billion loss to high cost of fuel, high salaries and fleet ownership cost.

The loss, which covers the 12 months ended December 2018, is an escalation from a Ksh6.41 billion loss reported in 2017 for nine months ending December 2017.

According to KQ CEO Sebastian Mikosz, high cost of fuel, high salaries and fleet ownership cost accounted for nearly two thirds of the its operating costs.

“Fuel is our greatest challenge and this will be for a while, oil prices are up by 30 percent. Fuel represents over 40 percent of our direct operating costs .We started mitigating this risk by implementing a new hedging policy with minimal risk,” said Mikosz.

The loss comes despite reports of growth in passenger numbers, which resulted in revenue growth of 41.3 percent to Ksh114.2 million. Additionally, the national carrier says it recorded a 52.3 percent growth in cargo revenue to Ksh8.68 billion.

“2018 was a challenging year for KQ; we have however seen growth in passenger numbers. Management team have done a great job under the circumstances and thanks to the board for massive support,” said KQ chairman Michael Joseph.

Mid this month, the Kenya Airline Pilots Association (KALPA) refuted claims that a bigger chunk of KQ income was going in the pockets of pilots, whom Mikosz said were overpaid.

KALPA said that 130 pilots left KQ to Middle East airlines in just one year for greener pastures.

According to the association’s secretary general Mureithi Nyaga, the financial woes facing KQ cannot be attributed to pilots’ pay, but instead are as a result of poor management, high cost of ticketing and high expatriates’ wages.

According to Nyaga, pilots flying the Boeing earn a gross salary of Ksh483,350 while those flying Embraer earn Ksh407,916. Captains get a house allowance of Ksh36,000 while first officers get Ksh30,814 for the same.

“The figures the CEO stated are exaggerated. I am not aware where the CEO got the Ksh1.6 million he was telling you about,” said Nyaga.

Read: KQ Resorts To Code Sharing Before Finally Suspending US Direct Flights

The shortage of pilots could have affected most KQ routes, with the airliner opting to code sharing with Delta Airlines in the US direct flights.

In a bid to turn around loss making at the carrier, KQ was planning to take over operations at the Jomo Kenyatta International Airport (JKIA) which flopped after public outcry.

Workers at JKIA also staged a go-slow, which allegedly led to a loss of Ksh300 million to the carrier.

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Written by Francis Muli

Senior reporter at Kahawa Tungu, Muli has a passion for human interest stories. Believes in unearthing societal rots that have been hidden from the public eye.
Follow me on Twitter @FmuliKE. Email francis@kahawatungu.com

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