Kenya Airways issues profit warning

Kenya Airways (KQ) has announced that it anticipates 25 per cent or more lower earnings for the period ending December 31, 2019 when compared to 2018, pointing to wider losses this year despite several cost cutting measures by the carrier.

In a notice signed by Kenya Airways Board Chair Michael Joseph, the troubled airline blamed the performance on stiff competition.

“Although Kenya Airways realised improved revenue growth in the year, profitability was constrained by the increased competition in the airline’s area of operations which, in turn, has increased pressure on pricing in order to remain competitive,” he said.

“In addition, the adoption of new International Financial Reporting Standards (IFRS) 16 rules in 2019 has required significant adjustments to both the profit and loss statements and balance sheets for the current financial year,” he added.

The profit warning means that KQ will report a net loss greater than the Sh7.5 billion that was recorded in December 2018 when higher costs offset a jump in revenue.

The troubled airline has been making efforts to improve earnings after several years of posting losses.