Kenya Airways Plc (NSE: KQ) 1H18 Earnings Note
Kenya Airways Plc (NSE: KQ) announced an improvement in 1H18 operating results. Loss before tax narrowed to KES 4.0Bn from KES 5.8Bn in 1H17mainly due to a 41.4% y/y cut in 'other costs', majority of which we attribute to interest expenses. The increase in global fuel prices during 1H18 (+12%) continued posing a challenge to operating results, with direct operating costs up 13.9% y/y mainly contributed by fuel costs which rose 16% y/y. However, overheads and other fleet costs declined 20.4% y/y and 2.2% y/y respectively. Revenue performance was stable, with total income up 3.1% y/y brought about by an increase in passenger numbers to 2.3Mn (6.6% y/y). Long term, the prospects of the business look solid and we see a high probability of profitability in the medium term. The counter is currently at KES 10.65 representing a -37.9% YTD performance.
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