KQ Aims At Enhanced Growth Strategy with New Investors

Kenya Airways is set to make major steps in the coming weeks to ensure the airlines’ financial stability, and sustainability to achieve its turnaround strategy.

Key among the initiatives is: creating liquidity and lowering the level of debt.

“The plan is designed to place Kenya Airways on a stronger long-term financial and operational footing. The optimisation process will have no impact on the airline’s passengers and other customers, who will continue to receive the same high quality of service,” said Mbuvi Ngunze, the  chief executive during the release of the Airline’s first six months financial results ended September 30, 2016.

Michael Joseph, the newly appointed Chairman on Friday at a press briefing assured the shareholders that the airlines’ shareholders Air France-KLM and the Kenyan government “will do whatever is necessary both financially and in support to turn this airline around”.

Further, “There are areas that need to be strengthened, for instance we do not have a director of Human Resources Management, we do not have a substantive Chief Financial Officer, and we should fill these positions as they are vital for the operations of Kenya Airways.”

The former Safaricom CEO also noted that Mbuvi Ngunze, the chief executive, was not going anywhere, “He is in the middle of negotiating with our financiers to get better terms in order to get out of the hole we are in. He is critical in that process since he knows and understands these people,” said Joseph.

The new chair also disclosed that he will be renegotiating the 2001 joint venture agreement with KLM.

Amb. Denis Awori, the former chair in July as regards to calls to terminate the joint venture, he said, “KLM is both a shareholder and an important business partner to Kenya Airways. We believe that this partnership is a key enabler in achieving our turnaround in the short term. The business is looking at all opportunities for improvements, including ways to further strengthen our partnership with KLM.”

The joint venture allows KLM and Kenya Airways to jointly implement further commercial synergies, optimize networks and schedules to better jointly serve these markets and further enhance customer experience and travel options.

Under the agreement which has been executed in phases include:

•        In 1997, they initiated a joint venture on the Amsterdam – Nairobi route.
•        In 2008, expanded the joint venture with the addition to flights between JKIA and Charles de Gaulle Airport in Paris, France.
•        In 2014, the cooperation was expanded through the addition of the London – Nairobi; Amsterdam –Entebbe/ Kigali route; Amsterdam – Lusaka and Harare routes; and the Amsterdam-Kilimanjaro/Dar-es-Salam route.

KQ in the recent months has invested heavily on the African route which accounts for 60 percent of its revenue.

The airline intends to introduce 30 new flight frequencies across the network this year.

“We are constantly relooking at our network to ensure we continue winning in Africa by offering the most reliable connectivity through our hub Nairobi. We have seen connectivity in the region improve by 14 per cent and are optimistic with our improved efficiency this will increase with the new schedule,” said Mr Ngunze.

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