April 30, 2019 / 11:18 AM / 23 days ago

UPDATE 2-Kenya Airways likely to stick with Boeing as losses narrow

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By Duncan Miriri

NAIROBI, April 30 (Reuters) - Kenya Airways has not considered switching its future plane orders to Airbus following Boeing’s 737-MAX jet crisis, the airline’s chairman said on Tuesday after it posted a rise in last year’s revenue.

The airline, in which Air France-KLM holds a 7.8 percent stake, reported revenue of 114.45 billion shillings ($1.13 billion) for the 12 months to Dec. 31, up from 106.17 billion a year earlier.

The carrier, which narrowed its pretax loss for the period to 7.59 billion shillings from 9.44 billion, needs to boost its fleet of Boeing and Embraer planes to grow its business in the face of stiff competition from rivals like Ethiopian Airlines.

“We have a plan to grow the fleet if we had the means to do that and it is both wide bodies and narrow bodies. That means the 787s, 737s and Embraers,” Michael Joseph told Reuters after an investor briefing.

Airlines and regulators around the world last month grounded the 737-Max planes, a narrow body industry workhorse, after two horror crashes in Indonesia and Ethiopia.

“We haven’t even thought about possibly going to A320-Neo. It is not even in our thoughts at the moment. We need to see where they are going with the 737 Max,” Joseph said.

The airline, whose balance sheet swung back into negative equity territory last year after fuel and fleet ownership costs surged, wants to run the main airport in Nairobi to boost its cash flow and allow it to buy new planes.

The proposal, backed by the cabinet last year, is in the hands of parliament’s transport committee which has to approve it before it is implemented, Joseph said.

It expects to add two Boeing 787 Dreamliner planes back to its fleet later this year. The planes had been leased out to Oman Air, as the then cash-strapped Kenya Airways trimmed its fleet size to stay afloat.

It was forced to restructure $2 billion worth of debt in late 2017 after a slump in Kenyan air travel following several attacks by Islamist militants from Somalia.

It started direct flights to New York last September and plans to run new flights to Rome and Geneva later this year.

“It (New York) is a loss-making route but it is feeding our Africa network,” Sebastian Mikosz, the group CEO, told investors.

The increase in revenue last year was driven by higher income from passengers, the airline said.

Its shares fell 3 percent to trade at 4.70 shillings after the results.

$1 = 101.3000 Kenyan shillings Editing by Ed Osmond

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