Kenya Airways blames tourism slump for record losses

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Kenya Airlines planeImage source, Public domain via Wikipedia Commons
Image caption,
Kenya Airlines is looking for a $200m loan to help it recover

One of Africa's largest airlines Kenya Airways has announced its biggest ever annual loss.

It has partly blamed the $290m (£188m) shortfall on a decline in Kenya's tourism sector.

Some countries had issued travel advisories warning about terror threats in certain areas.

Finance Director Alex Mbugua also told investors that the airline has been hit by competition from Gulf carriers, reports the Reuters news agency.

Competition from within the continent is also a factor, with Ethiopian Airlines becoming a major regional rival.

Losses were forecast but these were "much worse that they were expected to be", African Aerospace magazine editor Alan Peaford said.

Image caption,
The UK lifted its travel warning to parts of Kenya's coast in June - but numbers are still low

Tourism numbers are down because of the attacks in Kenya by Somalia-based militants al-Shabab, he added, but Kenya Airways has also been late in responding to the challenge of Ethiopian Airlines.

Kenya Airways moved to upgrade its aeroplanes ordering its first Boeing 787 Dreamliners in 2013, some two years after Ethiopian Airlines.

But the timing was unfortunate as it coincided with the tourism slump and the "growth of the fleet... was not matched by revenue growth," the airline's Mr Mbuga acknowledged.

Image source, Reuters
Image caption,
US President Obama had a look at an Ethiopian Airlines Boeing 787 Dreamliner on his recent trip

Kenya Airways has also been hit by insuring itself against fuel price rises at exactly the time when prices have been falling.

The airline is now looking for a $200m loan to help it through this period.

In June, the UK government lifted its warning against travelling to part of Kenya's coast, including Mombasa.

Correction 31 July 2015: This story has been amended to remove the incorrect statement that Ethiopian Airlines does not publicly declare its profits or losses.

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