KENYA AIRWAYS’ FAILED TURNAROUND PLANS PROMPT CALLS FOR CHANGE OF GUARD
(Posted 29th August 2019)
(Kenya Airways, the Pride no more)
It was grim faces all round when Kenya Airways embattled board chairman Michael Joseph yesterday announced another massive half year loss, amounting to some 8.5 billion Kenya Shillings, leaving the financially and otherwise struggling airline technically bankrupt.
While according to figures seen revenues increased by 12 percent to 58.5 billion did cost rise even faster, stripping away any gains made by greater revenues.
The cost increase was given as more than 15 percent with the real figure standing at close to 61.5 billion Kenya Shillings.
Kenya Airways, which in the past through some of the highest fares in the world on regional routes made fortunes, now also faces fresh competition from revived airlines in Tanzania and Uganda, where the new national airlines hit KQ’s market for point to point flights to substantially lower fares, no doubt further eroding passenger numbers and load factors on these routes.
Board chairman Michael Joseph tried to put a brave face to his announcements, again singing from his original hymn sheet that the future looked brighter and it was only a matter of time when the results would be better.
Reality of course tells a different story as his CEO of choice nearly three years ago had already thrown in the towel after realising that – unless in his own words he could get his hands on the cash kitty of the Kenya Airports Authority – his plans had failed. The proposed merger with KAA was shot down in flames in parliament, when the issue was debated though the nationalisation option remains under review.
Now it seems, according to usually well informed sources, that the gunsights are being trained on the chairman himself to not only replace the CEO and his chosen team but also radically alter the board composition.
It is in particular the banks, which hold a combined 38+ percent of the company shares after a debt for equity swap, which are pushing for quick improvements, or else that government, presently owning 48.9 percent of the company shares, take over the company in full and pay them full value for their shares.
That is seen against the backdrop of a share price of only 2.48 Shillings at close of business yesterday, when the Kenya Airways shares took another hit losing nearly 7 percent after the latest loss data had been publicly revealed.
A leading travel agent in Nairobi, when contacted by ATCNews – on condition of anonymity – had this to say: ‘The flights to New York are massive loss makers and I am wondering when that is finally being acknowledged and consequences taken. Yes, in principle are direct flights to the US good because it is a big market for Kenya but fact is that most of the North American tourists arrive on other airlines, flying via their hubs in Europe, the Gulf and even Addis Ababa.
When RwandAir launches their flights to the US, our direct competition will get even harder, making the situation worse again. There are also a lot of complaints about Kenya Airways in regard of flight cancellations, flight delays and more. The airline needs, in fact deserves new leadership because those put in charge have absolutely failed. Time for them to quit of be fired‘ mincing no words for sure.