Kenya Airways Falters

I love Africa. The smells, the vibrancy and the people have captured my heart since I lived there as a child. African aviation, therefore definitely absorbs my interest and attention from the days I used to fly Nigeria Airways (now defunct). Back then East African Airways flew to Uganda and Kenya from many of the airports I travelled through and I wondered at this airline’s livery and slogan: “Fly among friends“.

EAA VC-10 of EAA arriving at London Heathrow from Kenya, July 1973-Wikipedia

EAA VC-10 of EAA arriving at London Heathrow from Kenya, July 1973-Wikipedia

Sadly they collapsed in 1977 with debts of $US120million to be replaced by three airlines; one of which is Kenya Airways. These days that loss would be the equivalent of about half a billion dollars. A lot of money for African countries to absorb.

But today’s Kenya Airways needs a bail out of that magnitude if it is to survive after making a massive loss of $US295 for the year ending in March its third successive loss. Some sources are warning of near collapse.

Source: KQMsafiri

Kenya 787 Dreamliner. Source: KQMsafiri

Kenya Airways, Africa’s seventh largest carrier had been flying high with good numbers and rapid growth. This growth was accompanied by large orders for new planes including ten B787s – now scaled back to six. To stave off a potential threat from Tanzanian low cost carrier Fastjet, Kenya Airways  launched their own in house low cost airline Jambo Jet in April 2014.

The airline has stated that revenue has stalled largely due to attacks by Al-Shabaab, Somalia’s prime terror group on coastal locations and Nairobi’s Westgate Mall. Al Shabaab warned tourists to stay away from the country. Other factors they say impacting on the airline’s passengers include the West African Ebola crisis and competition from Gulf carriers. Passenger load factors have not made it above 70 per cent for the last two years. Critics say that poor management decisions, frequent flight cancellations, staff unrest and poor customer relations are to blame.

Everyone agrees that Kenya Airways needs a rescue plan or another African carrier is headed to oblivion. Kenya Airways secured a loan from Cairo-based AfrEximbank to avoid complete bankruptcy and is negotiating with the bank on ideas to raise more capital. It’s two largest shareholders the Government of Kenya (29.8.% of shares) and Air France-KLM (26.7%) will no doubt closely involved.

The Kenyan government has said a turnaround plan for the airline would be announced within the next two months involving:

  • a reduction in pilot salaries
  • cutting  routes
  • selling aircraft, including some of their Dreamliners
  • reviewing the KLM partnership

Consultancy firms are also reviewing the decisions made by the airline’s board.

The visit by US President Obama is expected to result in a fillip for Kenya tourism. This may help Kenya Airways along with the turnaround plan. I hope so. There is still much of Africa I have yet to explore and a Kenya Airways 787 is one way I would like to get there!

 

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