Kenya Airways said it was expanding its services as the emerging global recovery would give the company a boost this year after a gain on fuel derivatives pushed it back into the black for the year to March.

Kenya Airways, one of Africa's largest carriers and 26 percent owned by Air France-KLM , said it expected the economic recovery seen in other parts of the world would flow into Africa and Kenya would benefit this year.

The airline has had good growth since the first half of 2000 on the back of new routes to underserved African markets from its Nairobi hub and it plans to expand even more.

Chief Executive Titus Naikuni said Kenya Airways would start services to nine destinations including Rome and Juba in South Sudan. The airline is also considering increasing the flight frequency on some routes like Kigali and positioning Accra as a west African hub.

"We still believe that Africa is where our mainstay is. It is where potential is," Naikuni said.

The company's revenue in the 2009-2010 year dropped slightly due to a 11 percent decline in income from its cargo business but turned to a pretax profit from a loss a year ago due to a 6 billion shilling ($74.72 million) boost from its fuel hedges, which it uses to balance future costs, after a 7.5 billion shilling loss the previous year.

It also benefited from a weaker shilling against the dollar.

At 1000 GMT, Kenya Airways' shares were down 4.4 percent at 54.50 shillings.

"The results whilst commendable did not hit investors' admittedly elevated baseline expectations, and hence the profit taking bias this Morning," said independent analyst Fleet Modernization

CEO Naikuni confirmed the airline was in discussions with Airbus about purchasing A330s after further delays in Boeing's much anticipated B787 Dreamliner jets.

Kenya Airways had ordered nine Dreamliners with an option for a further four, but they are not due for delivery until May 2013, which has prompted it to talk to Airbus about the A330 aircraft, Naikuni said.

"We should be able to make up our mind (about whether to buy A330s) by the end of this calendar year," he said.

He also said Kenyan horticulture producers, whose exports to Europe account for a significant portion of the airline's freight business, should consider exporting to other African markets.

Exports were hit when much of European airspace was closed due to an ash cloud from a volcano in Iceland.

The airline is watching the progress of European carriers' demands for some form of compensation from the European Union for losses accrued during the airspace closure in April, Naikuni said.

"We are looking at it and in the event that window is open, we will follow the others," he said.

He also said Kenya Airways was discussing code sharing agreements with several airlines like Qantas and China Southern.

The company posted a 2.67 billion shillings pretax profit for the period from a loss of 5.66 billion shillings in the previous year on revenue of 70.74 billion shillings, down from 71.83 billion. (Reuters)