Money Markets
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.
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.
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