Kenya Airways has 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.

The airline said Tuesday it expected 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.

Kenya’s national carrier had made a Ksh2 billion (23.52 million) profit in the first half of last year.

“Though we anticipate the second half of the year will be better, we don’t think our performance will be good enough,” said Alex Mbugua, the company’s finance director.

A profit warning, as per the Capital Markets Authority regulations 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, compared to Ksh48.6 billion ($571 million) in a similar period last year, pulled down by decreased numbers on European routes, network pressure and concerns over insecurity.

“Security is an issue as it has led to 50 per cent traffic reduction on the London-Mombasa, and also pushed us to scrap flights to Zanzibar,” Titus Naikuni, the firm’s CEO said.

The African carrier is banking on increased volumes to Asian and cost reduction strategies to boast the company to profitability.

Asian routes have bigger margin compared to Europe. “We are looking at deploying our bigger planes-currently flying into Europe- into the Asian routes which should help us grow our revenues,” said Mr Naikuni.

The latest financial performance will put pressure on Kenya Airways, which has fallen on hard times in recent months, to put its house in order especially in view of the increased onslaught from other African and Middle East carriers.

Globally, the airline industry is facing turmoil in the wake of a slowdown in the world’s economic growth, reducing global travel and limiting access to the funds for expansion. To survive, airlines around the world have adopted an almost identical approach.

First, airlines have either laid off staff—or slashed wages—or sought to raise capital. This has then been followed by retiring old aircraft that consume more fuel. And finally, there has the retreat from unprofitable routes. Gulf, Japan and South African airways are some of the airlines that have adopted this approach.

Kenya airways has laid off staff, raised capital, retreated from unprofitable routes-Muscat and Rome- and is currently in the middle of a fleet upgrade that will see it retire some of its older planes.