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Kenya Airways says fuel costs threaten profits

June 12, 2008
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According to Reuters, Titus Naikuni, the chief executive of Kenya Airways, one of Africa''s most successful airlines, said recently that its profits could entirely disappear if fuel costs keep rising.

Like other world airlines, the carrier is facing higher operating costs as the price of crude oil has surged. It was up another 80 cents at $135.21 a barrel.

The airline, which is 26 percent owned by Air France-KLM reported a 2.5 percent fall in post-tax profits to 3.9 billion shillings ($62.9 million) for the 2007/08 financial year.

It attributed the dip to Kenya''s political unrest in the beginning of the 2008, which led to cancellations in the middle of tourism''s high season.

Naikuni said fuel accounted for 39 percent of total costs up from 28 percent a year ago. The firm has taken measures to deal with the rising costs including passing them onto passengers, he said.

Kenya Airways has already raised its fuel surcharge and Naikuni said fare increments would be implemented from July.

Naikuni said that passenger numbers could drop as ticket prices went up.
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