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Kenya Airways May Add as Many as 20 New Routes in Five Years

Kenya Airways May Add as Many as 20 New Routes

2018 03 23

2018 03 23

By Bella Genga,
Bloomberg News

Kenya Airways Plc plans to add as many as 20 new destinations in Africa, Europe and Asia in the next five years, Chief Executive Officer Sebastian Mikosz said.

The route-network expansion will help sub-Saharan Africa's third-biggest carrier, in the midst of a turnaround program after a record loss in 2016, return to profit. On Wednesday, the airline reported a 6.1 billion-shilling (US$60.3 million) loss for the nine months through December.

KQ, as the company is known, will seek board approval for the new-route plan in April, Mikosz said in an interview in the capital, Nairobi. It's also preparing to take back five aircraft it sub-leased to other carriers, to build capacity and cater for additional passengers, he said.

"We are looking at at least one European route and one Asian route on top of the African network," Mikosz said. "In 2018, we might announce maybe two, three new routes to be operated in 2019."

The carrier is exploring partnerships and joint ventures with other airlines and has began discussions with South African Airways. Kenya Airways is considering collaborating on aircraft repairs and route joint ventures with the state-owned South African carrier, Chairman Michael Joseph said in the same interview.


Sharing Routes

"We've discussed issues of mutual concern," Joseph said. "We fly to similar destinations in Africa. They fly to Uganda, we fly to Uganda, among other routes, so there's a possibility we could probably share those routes."

Kenya Airways will this year take back two Boeing Dreamliners and three Boeing 777-300 aircraft sub-leased to Oman Air and Turkish Airlines respectively between September this year and December 2019. One of those aircraft will be used to operate the new New York route that will be launched in October, which should fuel revenue growth in 2019, Mikosz said.

KQ in November completed a reorganization that resulted in Kenya's government increasing its stake to 48.9 percent from 29.8 percent, and domestic lenders owning 38.1 percent after a debt-for-equity swap. Air France-KLM's stake shrank to 7.8 percent from 26.7 percent after the financial restructuring.

"2018 is a year of consolidation, of finalizing all the cost-reduction measures we have put in place, making sure we have the systems in place in terms of a revenue point of view," Joseph said. "If everything goes according to plan, I think the path we are on is a good one."

KQ shares fell as much as 12 percent, the largest decline since 2009, after the results announcement. The stock closed 7.5 percent lower at 10.5 shillings.

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