Jambojet posts Sh287m loss in first year of operation

Money Markets

Travellers board Jambojet plane on its maiden trip in Kisumu last year. PHOTO | FILE 

By GEORGE NGIGI, gngigi@ke.nationmedia.com

In Summary

• The low-cost local airline, fully owned by the Kenya Airways, posted revenues of Sh2.6 billion in the year to March.

Budget airline Jambojet posted a Sh287 million loss in its first year of operation, Kenya Airways has revealed.

KQ had also booked a Sh118 million loss associated with Jambojet last year attributed to the amount used to finance the setting up of the low-cost carrier.

The low-cost local airline, fully owned by the listed carrier, posted revenues of Sh2.6 billion in the year to March.

“The capacity within the domestic market registered a 29 per cent growth following a successful entry of our low-cost carrier Jambojet into the arena,” said Kenya Airways in its full-year report.

JamboJet has been operating flights between Mombasa, Eldoret, Nairobi and Mombasa, with air tickets going for as low as Sh2,950 one-way since April last year. It carried 480,092 passengers collecting fares of Sh2.04 billion in the year.

“Most productive route is Mombasa, followed by Kisumu and Eldoret. Next is Ukunda where we doubled the number of passengers. Unfortunately the runways in Ukunda and Lamu don’t allow us to carry full loads,” said Jambojet chief executive Willem Hondius. Mr Hondius noted the Kenya Airport Authority was working on the Ukunda and Lamu strips which will increase their operational capacities.

The budget airline, which has a fleet of four planes — two 142 seats B737-300 and two 78 seats Bombardier Q400, operates on a strategy of charging low fares by offering little luxury.

Passengers pay for extras like food, baggage and seat choices. The report shows the airline has 29 employees.

Jambojet was said to have fixed assets of Sh121 million underlining its heavy reliance on the loss-making parent company. Its liabilities stood at Sh1.27 billion, of which an estimated Sh881 million was carried forward from defunct Flamingo Airline.

READ: Jambojet misses first year passenger targets

Flamingo was a low-cost carrier that had been operated by KQ for four years before it was absorbed into the group in 2004, having not recorded a profit.

At the beginning of the year, the Kenya Civil Aviation Authority (KCAA) gave Jambojet a one-year licence to ply international flights to nine major East African destinations, a factor likely to boost its financial performance in the current financial year.

“Last year we had start-up losses during the first part of the year. As subsidiary of KQ I cannot release any figures, but this year we are doing well,” said Mr Hondius.

KQ management disclosed cautious expectations over the Jambojet performance. The airline posted a record Sh25.7 billion loss last year making improved performance by Jambojet crucial to the group’s performance.