SPOTLIGHT ON KENYA AIRWAYS’ NEW CEO AS HE ANNOUNCES HALF YEAR RESULTS
(Posted 13th November 2014)
A new era will start in the morning when Mr. Mbuvi Ngunze, Kenya Airways’ new Chief Executive and Group Managing Director, will for the first time be at the centre of the action as the airline is set to announce their half year results.
It will be an announcement of mixed fortunes for Kenya’s national airline, on the upside major cost savings as a result of phasing out the aged B767-300 fleet and replacing these fuel guzzlers with the state of the art B787-8 Dreamliners, which in average burn 20 percent less fuel while offering a wider range and higher payloads. Combined with falling aviation fuel prices will this no doubt have an impact on the financial bottom line in Q3 and Q4, as the airline is struggling to return to profit territory.
The downside for Kenya Airways is the double whammy of ongoing anti-travel advisories which have had a serious impact on the number of visitors coming to Kenya, as recent data published here have confirmed, and the added impact of revenue losses from several West Africa routes as a result of having to suspend flights into the Ebola zone.
In fact it was Mbuvi Ngunze himself who, only two weeks before taking over the CEO position, commented on the impact of the revenue losses from and to West Africa, which he quantified as up to four percent of the projected annual revenue, translating to as much or more than 4 billion Kenya Shillings.
While these challenges remain an almost daunting task, as neither is within the powers of the airline to resolve on its own, are there enough positive signs too for the new regime at Kenya Airways to take advantage of. Now operating what Kenya Airways’ Director of Marketing Chris Diaz a few weeks ago described as Africa’s youngest fleet – after taking delivery on subsequent days of a new B787-8 Dreamliner and of a new B737-8HX can Mr. Ngunze concentrate on rolling out a range of service improvements on the ground, aided by newer and more reliable aircraft and the opening earlier in the week of two of Africa’s most modern airline lounges, Pride and Simba, in the airline’s new home terminal 1A. ‘The new terminal gives a lot of space and added comfort to travelers flying with KQ which at the old Unit 2 they never had. That place was totally congested and overloaded and the new check in area is spacious. Very important, it now has a fast track special entrance and check in area for Premium passengers. There are more immigration counters available, also with a fast track lane and immediately after that is the new single point security check after which passengers are free to shop, enjoy the new restaurants and of course, for those travelling in Business class, enjoy the new lounges. On the arrival side has Kenya Airways already got more busses and yet more are on order and when the arrivals facility is fully functional will KQ have the best of the best on the ground for their passengers. New menus on board will also help to give them a boost and because the new CEO was COO before, he knows exactly what has to be done to sort out their crunch points and critical issues impacting on the way Kenya Airways is seen and perceived in public’ said a regular source close to the airline when asked to give a brief impression of challenges and opportunities the new man at the helm is faced with.
Shareholders in particular will be keenly awaiting the half year results, which the moment they have been officially released will also be published here. For them it is of particular concern because their share value has dropped over the past year by some 30 percent, reflecting some major losses over the past few years as well as the challenges outlined above. The share price, at one stage in October at an eight year low of 8.75 Kenya Shillings per share, rose yesterday again to 9.45 Kenya Shillings a share, certainly going in the right direction but still a long way off from past highs. The new CEO no doubt has his work cut out for him as the delivery of yet more B787 Dreamliners and B737-8HX’s next year will have to be paid for from the cash flow which in turn depends on higher load factors across the board as the alternative, another share issue, seems out of question at this moment in time.
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