World Cup Boosts Kenya Airways (KQ) Passenger Numbers

Published on Thursday 4th November 2010

National carrier Kenya Airways (KQ) recorded an increase in passenger numbers between July and September, boosted by the World Cup which raised traffic on its Southern Africa route.

The increased customer traffic, which is in line with the ongoing global economic recovery, has raised expectations that the airline will report improved half-year financial performance.

Passengers on its African routes, with the exception of Kenya, increased by 11.2 per cent to stand at 449,033 fliers compared to the corresponding months in 2009.

The biggest driver of these numbers was increased traffic on its southern African route, which captures the flow of football fans who flew to South Africa to watch the 2010 World Cup.

"The highest seat kilometre increase was registered in southern Africa region at 26.3 per cent growth," said Kenya Airways in a statement. "This was due to additional frequencies into Johannesburg during World Cup, Harare and Lusaka together with the additions of N'Dola and Gaborone into the network."

The average cabin factor improved from 70 to 73 per cent.

The average cabin factor is a measure of how full an airline's planes are whenever they are in the air.

KQ benefited from its partnership with Tanzania's national carrier, Precision Air, growing capacity by 11.6 per cent.

Capacity to the West Africa region increased by 4.2 per cent.

Cargo tonnage, however, reduced by seven per cent.

Analysts at CFC Stanbic Financial Services said the drop is likely to have minimal effect on KQ's financial performance, since 90 per cent of revenues come from passenger fares.

Kenya Airway lowered air fares in 2009, but ticket prices are expected to rise this year.

"Last year was a very poor year for the industry because of the global crisis which reduced the number of people flying into the country, but the airline industry is on a recovery," said Renaldo De-Souza, a research analyst with Genghis Capital.

Mr De-Souza, however, said that the entire industry is on the recovery path with competing airlines such as British Airways also benefiting from the increased demand.

On the domestic front, Kenya Airways is also facing stiff competition as local airlines slash fares, which Mr De-Souza says will result in reduced margins for the industry as a whole.

Mr De-Souza said KQ's performance is likely to be boosted by stable fuel prices, which always form a major cost component for airlines.

Kenya Airway's share price at the stock market is currently trading at Sh43. Last month the Aviation and Allied Workers Union (AAWU) threatened to go on strike, setting the stock on a downward momentum.

The strike was temporarily stopped by a court order.

Analysts at CFC Stanbic said that they may see the share price recouping to the Sh48 trading levels.

Last year's strike by the AAWU led to a Sh600 million loss for the airline.



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