July 31, 2015

Summary

Shock as Kenya Airways announces a kshs 25.7 billion loss. A spokesperson for KQ said it was down to a number of reasons.

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Shock as Kenya Airways announces a kshs 25.7 billion loss

Shock as Kenya Airways announces a kshs 25.7 billion loss

The Kenya National Airways has shocked the nation after announcing a  record Sh25.7 billion annual loss after tax.

The airline attributed the unparalleled loss for the 12 months that ended in  March to intense competition from Middle East carriers, volatility of exchange  rates, terrorism fluctuations in fuel prices and travel advisories, which have  caused a drop in International visitor arrivals.

CEO, Mr Mbuvi Ngunze also added that the heavy investments made  in the acquisition of new aircraft failed to yield the expected profits due to the  difficulties experienced in the aviation sector in the year under review. He  however expressed optimism that KQ will get back on its feet.

“We have had turbulent times but we are regaining our altitude. The board and management are working to review our strategy to respond to market dynamics.” He said while addressing a press conference.

REDUCE FLEET

The airline now plans to sell seven of its 52 aircraft after results indicated that its fleet capacity was under-utilized during the 2014/2015 financial year.

The performance by KQ is reported to be the worst in the country’s corporate history and has also poised the airline as one of the highest loss-making companies in East Africa.

The National Carrier once acclaimed as most profitable airline in the continent has been facing perhaps the strongest headwinds since its privatization in 1995. Last year, 2014 declared a sh Sh10.45Bn Loss.

MAJOR COMPETITION

As observed by John Augustine Ngari in an article published by the Afrika Reporter, “The steady rise and coverage of other airlines in key destinations across Africa (that were previously KQ’s strong point) has sparked gruesome competition, which puts into perspective the impact of managing costs in a competitive environment for KQ”.

Ethiopian Airline in particular continues to be a major threat for KQ. (http://www.afrikareporter.com/kenya-airways-turbulent-times-and-trouble-in-the-skies/)

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