HARD DECISION YIELD RESULTS AS KENYA AIRWAYS’ FUTURE NOW LOOKS BRIGHT AGAIN
(Posted 23rd June 2016)
Latest indications coming from Embakasi, Kenya Airways’ corporate headquarters, are such that for all intent and purpose the financial corner has now been turned. This follows several cash generating asset sales and leasing out of aircraft. Among them are the sale of a slot at Heathrow Airport in London, the sale of land near the airport and the sale of for now two Boeing B777-200. Added income is generated by the leasing out of three Boeing B777-300 to Turkish Airlines and of two Boeing B787-8’s to Oman Air.
Two more Boeing B777-200’s are still due for sale and negotiations are said to be ongoing, which, when successful, will further improve the airline’s bottom line during the current financial year.
The main cash flow improvements in recent weeks therefore have come from asset sales and lease income, which will last for between three and five years, while the jets are flying for other airlines.
Additional cost saving measures, like staff rationalisation and a review of the cost of outsourced services too are expected to yield results, even though the rabid pilots union KALPA continues to threaten the airline with industrial action in complete ignorance of economic reality.
The main shareholders though, the Kenyan government with just under 30 percent and KLM with 20 plus percent, appear to be sleeping easier again these days following the tough decisions the airline’s new CEO and new board chairman took as early indications are now emerging that the losses of the 2014/15 financial year may be halved when the results for the 2015/16 financial year are announced in coming weeks.
Said a regular source close to the airline: ‘It is clear now that Plan Mawingo was aimed to put Kenya Airways at level par or ahead of Ethiopian. It is also clear that various outside factors like anti travel advisories, security issues, the Ebola scare of last year and a weakening of some of the airline’s core market economies made that plan falter and fail. The new management had to climb down from a high horse but they did that with some dignity, considering the level of public criticism and with some determination. They ought to be given credit for that. Many of top management associated with the massive losses have gone and a new team has been assembled. There is a lot of talent in KQ and they know that their hard decisions are now beginning to pay off financially. In two years time the airline can be back in the black as long as the elections next year and other external factors do not spoil the recovery‘.
No doubt good news for the airline and the airline’s loyal passengers, who continue to enjoy the widening range of facilities now emerging at Kenya Airways’ home terminal 1A and who, when on board, experience the superior service especially when flying in the award winning Business Class called Premier World.
In a related development is Jambojet, a subsidiary of Kenya Airways, also once again expected to post a profit, which needless to say will help further improve the bottom line of Kenya’s national airline.