Kenya Airways Fights to Remain on Top

Given the financial constraints that Kenya Airways Board is facing, what specific measures is the airline undertaking to bolster its financial position?

The debate is still raging on whether the government of Kenya should bail out Kenya Airways from its financial woes or not and the matter still lies unresolved.

The truth is that the airline is now undertaking specific financial measures in an effort to bolster its financial position and retain its golden glory.

Kenya Airways management has over the last four years successfully undertaken several initiatives including the Rights Issue in 2012, through which the airline raised Ksh14 billion ($200 million at the then prevailing exchange rates).

In addition, the airline has obtained financing of over $630 million in medium to long term loans to finance Pre-Delivery Payments (PDPs) for both Boeing and Embracer aircrafts. Notably, the airline has been able to generate $249 million in cost savings between 2009 and 2014. Without these initiatives, the airline would not have been able to remain afloat.

Despite these initiatives, there is still a lot that needs to be done to keep the airline flying. Kenya Airways own some Dreamliners. Truth be told, owning and maintaining airplanes is very expensive and Kenya Airways has no business owning planes. The expensive dream liners should therefore be sold and funds directed to revamping the business.

Kenya Airways can still be the world leading airways without owning any plane. This is possible. Let them take a leaf from Uber, which is the world’s largest taxi company that doesn’t own a single taxi.

In fact, for the full-year period ended March 31, 2014, the airline took a depreciation and amortization charge of Sh5 billion in its profit and loss accounts, just because it owns aircraft. What if it did not own an aircraft at all? This is a figure that could have been used to convert the full-year loss for that period to a profit of Sh2 billion because the airline reported a Sh3.4 billion loss in the period.

And with the airline continuing to register new aircraft, this depreciation and amortization figure is likely to grow in the coming financial years.

However, the initiative by Kenya Airways to announce several flight scheduling changes that took effect from 1st of April 2015 is a positive effect towards making profits. This change is expected to boost connectivity for their passengers by 20 percent.

Kenya Airways has also upgraded the runway which has been done by the Kenya Airports Authority and is in its final stages. This will help in enhancing the flow of activities.