Baptism by fire for new Kenya Airways CEO as AGM reveals shareholder unrest

KENYA AIRWAYS HOLDS ANNUAL GENERAL MEETING

(Posted 23rd November 2014)

New CEO Mbuvi Ngunze underwent a baptism by the proverbial fire, when , following the announcement of an H1 12.5 billion Kenya Shillings loss two weeks ago, he had to face searching questions by shareholders who saw their fortunes dwindle when shares hit 8.60 KShs this week compared to 14.70 KShs a year ago.

Hit hard by anti-travel advisories over security concerns, which saw passenger numbers from the UK to Mombasa fall by some 40 percent, coupled with the West African Ebola crisis, which affected load factors not just to and from West Africa but also from and to other destinations across the KQ network, provided for a perfect economic storm for Kenya’s national airline. The halt of flights to the affected countries could cost Kenya Airways as much as 5 billion Kenya Shillings, offsetting a major portion of fuel savings the new B787 Dreamliner fleet will be generating this financial year, after the aged B767-300ER’s were phased out in August this year. Kenya Airways’ management had put a 9 billion Kenya Shillings in fuel savings on the table, generated by the new aircraft types and falling crude oil prices may also bring additional savings for KQ in coming months which may yet show on the bottom line.

Nevertheless, fewer shareholders than in past years attended the company’s AGM at the Bomas of Kenya conference centre yet those who were present left no doubt in their questions raised that they expected a sharp turn to the better in the future to break a streak of loss making years and return to profitabilityas early as the next financial year.

Said a regular aviation pundit from Nairobi in response to questions raised: ‘The fundamentals are still right for KQ even though today’s latest security incident once again means a setback for our country’s efforts to bring tourists back. It is again a failure of our security organs and in no civilized society could security chiefs hang on to their jobs after so many glaring failures. Even though this happened far away from our main tourist centres, it will have a negative effect because the country appears unsafe. There are also the challenges to continue with the planned fleet and destination roll out under Kenya Airways’ strategic plan, because to accomplish that it will require added cash flow and liquidity. There are options like Precision Air is also evaluating, selling owned aircraft and leasing them back but that is too short-lived a measure and needs to be backed up but higher revenues and higher loadfactors. Maybe these figures might shock our government into action to launch some effective measures to boost tourism. They lifted the VAT burden on the airline and should do the same for tourism services. For Mr. Ngunze it is a tough start but then he got the bad figures out of the way and can now concentrate to improve KQ’s fortunes because surely the results cannot get much worse than they are right now’.

New aircraft, a brand new home terminal with two of Africa’s best premium lounges and new menus on board will, among other measures, provide passengers with a much improved travel experience, making sure that those who continue to fly with Kenya Airways will get value for their money.

Details of the annual financial results and reports can be accessed via www.kenya-airways.com

%d bloggers like this: