Kenya Airways (KQ) has recently been suffering losses and the carrier’s woes continue as it hands over its cargo handling services at Kigali International Airport to RwandAir.

The two airlines entered into a mutual agreement with RwandAir handling KQ’s cargo services in Kigali while KQ handles RwandAir’s cargo at Jomo Kenyatta International Airport in Nairobi.

East Africa’s largest carrier, KQ, has found it difficult to penetrate the cargo market in Rwanda.

“Our cargo operations in Rwanda have remained insignificant and we need to be more aggressive so we are strategising,” said Denis Munai, KQ station manager in Kigali.

Mr Munai said the carrier’s cargo team at the headquarters in Nairobi is drawing up a strategic plan due out next week and it will seek to increase penetration for KQ’s cargo services.

Read: KQ now ponders change of tack to get out of the woods

“When our strategy for the Rwanda cargo department becomes successful and our cargo revenues are revamped, we shall repossess the service from RwandAir,” said Mr Munai.

Rwanda’s skyline has experienced an increase in air traffic with Turkish Airline, Qatar Airline and regional airlines like Air Uganda landing at the country’s only international airport. The airlines have seen an increase in passenger numbers but the cargo business is yet to pick up.

Joseph Kabera, RwandAir cargo manager confirmed the carrier will take over KQ’s cargo handling but declined to give reasons for the handover.

KQ expects its 2012/2013 full year profits to fall by at least 25 per cent on account of high oil prices, currency losses and lower passenger numbers.

Kenya’s carrier chose to strike a deal with RwandAir in handling its cargo operations because Rwanda’s cargo at Jomo Kenyatta International Airport in Nairobi is also handled by Kenya Airways.

Rwanda’s aviation policy does not give exclusive rights to the national carrier to handle all cargo both incoming and outgoing.

KQ is currently under pressure from huge losses it has registered recently finding it difficult to manage certain departments and handing the cargo services to RwandAir is in line with cost cutting.

However, handing over cargo services to RwandAir is not solely as a result of posting losses but KQ is failing to make a break through onto Rwanda’s cargo market.

“Our cargo on the Rwandan market has remained insignificant and we need to be more aggressive on the market and it was wise to hand it over to someone as we strategize,” said Mr Denis Munai, KQ station manager in Kigali.

Munai added that the cargo team at the headquarters in Nairobi is drawing up a strategic plan due next week that will increase penetration of Kenya airways on the cargo market.

“When our strategy for Rwanda cargo department becomes successful and our cargo revenues are revamped, we shall repossess the service from RwandAir,” said Munai.

Rwanda’s skyline has of late seen an increase in the traffic with more airlines like Turkish airline, Qatar airline and regional airlines like air Uganda landing at country’s only international airport.

However, the passenger business with most airlines is picking up while cargo operations for most of them are yet to pick rhythm.

Kenya airways posted losses and it was attributed to high operating costs, lower revenues, high oil prices, currency losses and lower passenger numbers.

If KQ is trying to minimise costs by abandoning cargo handling, with RwandAir yet to breakeven as well it remains to be seen whether it will be efficient.

A former employee of Kenya airways in the cargo department who is now working with the Turkish airline says the operation was handed over to Rwandair early this year and some employees were laid off.

“It was due to losses where some workers were laid off in order to cut costs when the airline was going through hard times,” said the former KQ employee who preferred not to be mentioned.

The airline is expecting 2012/2013 full year profits to fall by at least 25 per cent on the account of the high oil prices, currency losses and lower passenger numbers.

Read: Kenya Airways posts $56.4m loss

However, this loss comes at the backdrop of last year where Kenya’s national carrier had made a Ksh2 billion (23.52 million) profit in the first half of last year.

Joseph Kabera, Rwandair cargo manager confirmed that the takeover of Kenya airways cargo handling was due to revenue issues suffered by KQ but he declined to give more details.

Kenya Airways early this year issued a profit warning for the full year ending March 2013 as it reported a net loss of Ksh4.8 billion ($56.4 million) in the six months to September on the back of surging costs and lower revenue.  

A profit warning, as per the Capital Markets Authority regulations in Kenya is issued if a company projects its profits would fall by at least 25 per cent meaning KQ, which posted a net profit of ksh2.5 billion ($29.4 million) in the year ending 2012, sees itself making a maximum profit of Ksh1.8 billion ($21.1 million).

Passenger revenues declined to Ksh43.6 billion ($512 million) in six months to September of last year, compared to Ksh48.6 billion ($571 million) in a similar period a year before, pulled down by decreased numbers on European routes, network pressure and concerns over insecurity.