KQ to set up fuel firm

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According to allafrica, Kenya Airways is considering setting up a fuel procurement company as part of new cost cutting measures.

The airline, which cut its staff numbers by 476 in the last financial year, recently announced a $1.3 million pre-tax loss for the year ended March 2013.

The loss is attributed to lower passenger traffic, high operational costs and a strong shilling. Having its own fuel procurement company will cut down on the most expensive aspect of air travel – fuel accounts for around 40% of KQ’s direct costs each year. If the plan goes ahead, KQ will join a list of other global airlines that have taken similar measures to reduce their fuel expenses. Last year, American airline Delta bought a refinery in Philadelphia to cut its jet fuel expense.

Apart from a fuel firm, KQ also plans to set up a hotel, either fully-owned or in partnership with another investor, in order to reduce costs of crew and passenger stays at hotels during delays or schedule changes of flights.

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