When Kenya Airways published the country’s worst-ever corporate results last month, the scale of the loss revealed the effects of several disastrous decisions that the national carrier is struggling to reverse. The airline’s “Pride of Africa” slogan rang uncomfortably hollow when the 26.22b shilling (US$259m) loss was announced, driven by higher borrowing costs and unfavourable exchange rates. Kenya Airways, founded in 1977 following the demise of East African Airways, was considered a cash cow just a decade ago, but is now floundering, said independent analyst Aly-Khan Satchu. “In the history of Kenya, no other listed company has ever recorded such an important loss,” Satchu said. A misguided expansion strategy launched in 2011 is the root of the catastrophic state of the firm, a move that called for the purchase of new Boeing planes with the objective of doubling the size of its network. But since then the Ebola virus and terror attacks on the continent have decimated Africa’s tourist numbers, while rivals such as state-owned Ethiopian Airlines and Qatar Airways have boosted their offerings. The firm has also lost out on rock-bottom fuel prices. Like many airlines, it “hedges” its fuel costs by entering into a fixed-price contracts. But Kenya Airways was locked into longer term contracts than most of its competitors, which gained a competitive advantage as fuel prices have plunged since mid-2014. Foreign currency “and fuel hedging are exceptional items, yes, but a company like KQ (Kenya Airways) should be able to deal with this,” said Satchu about the airline’s latest results. Despite the gloom, analysts still see some cause for optimism in the numbers. Revenue was up 5% and operating losses shrank thanks to a series of shock treatments imposed on the airline by management last year. “The operational result is what I’ll take from the latest results,” said Eric Musau, analyst at Kenya’s Standard Investment Bank. “KQ is on the right track, even if they could do a bit more in terms of assets sales,” he said, describing the net loss as largely down to exceptional factors.<br/>
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Venezuelan officials have charged a security official for the Mexican airline Aeromexico and four members of the Venezuelan national guard with conspiring to traffic cocaine. The public prosecutor's office says it also has filed charges against 11 other people in connection with the discovery of 600 kg of cocaine at the Mexico City international airport in June. The cocaine was found distributed among eight suitcases on a plane originating in Venezuela. The prosecutor's office said Saturday that the Aeromexico security official and the other 15 suspects are all under arrest.<br/>