Friday, 17 March 2017

KENYA: Kenya Airways Improves, Many Congratulations To Management

Over the last two years, Kenya Airways has weathered the most turbulent period in its four-decade history.

However, the airline has demonstrated resilience against the after-shocks of the poor performance recorded in the financial year 2014-15.

Pessimism about the airline’s prospects and future is slowly dissipating, thanks to aggressive measures geared to sustained recovery of the national carrier.

Kenya Airways is now on a promising trajectory. Operation Pride – the strategy to turn around the airline – is yielding fruit.

Some initiatives under the strategy have been successfully executed resulting in improved financial and operational performance.

In the last three quarters of 2016-2017 financial year to December, for instance, KQ flew 3.4 million passengers, the highest number in its four decades of existence.

We achieved this despite tight fleet capacity arising from the lease and sale of some aircraft as part of ongoing measures to manage costs.

A lot of this growth is coming from Africa, especially North Africa and East Africa where capacity grew by 9.6 per cent and 7.1 per cent, respectively.

From the foregoing, it is evident that Africa is contributing significantly to the airline's recovery. Indeed, Africa remains our mainstay and is at the heart of our recovery strategy.

For us, it’s not just about offering seamless connectivity, but also enabling the sustainable economic development of the continent.

Last year, we were awarded the African Airlines Association Outstanding Service Award for service delivery, innovation and competitiveness in the African aviation industry.

We are winning in Africa. We were recognised by the World Travel Awards as the leading airline in Africa and the best business class airline in Africa.

Fleet rationalisation is one of the core recovery initiatives. The other is network optimisation geared to growing revenue by capitalising improving connectivity.

This includes increasing flight frequencies on certain routes to maximise volumes and revenue. We are also in the process of reviewing certain strategic relationships with our key airline partners.

An example is our joint venture with KLM which has undergone a series of iterations in line with our network optimisation process. These changes will increase revenue from our European and North American markets.

This journey has been exciting though not without some challenges. It must be understood that the aviation business is perennially fraught with risks ranging from bad weather to currency volatility and uncertain oil prices.

Although our On-Time-Performance (OTP) – a measure of operational efficiency – has improved overall, we experienced delays in December owing to bad weather in Europe and the Middle East.

Also, and our subsidiary Jambojet had challenges on-boarding new aircraft resulting in delays over the Christmas period. We know that delays constitute a major pain point for our customers and are working hard to minimise such inconveniences.

Kenya Airways has also been losing pilots and engineers. We see this is a major area of concern and a risk factor to the organisation.

The Board has made some decisions aimed at attracting and retaining critical talent. Additionally, management has been working closely with the Kenya Airline Pilots Association, to drive productivity and find a winning formula on contentious issues.

Enhancing employee productivity remains a critical pillar of Operation Pride.

As such, the airline has had to let go of a number of employees and redeployed others within the organisation. But we do not anticipate any further major layoffs in the near future.

One major plank of our turnaround is the balance sheet optimisation. The work around this has been going on over the last six months.

I recognise the strong support and willingness of our financial partners to support the consensual approach to liquidit and deb reduction. We have made significant progress. The next two months will be crucial to the closure of this issue.

Let me take this opportunity to clarify that the Kenya Airways Board has reviewed the contract with Mckinsey, the consulting firm advising on the turnaround.

It was felt that since major initiatives under Operation Pride are now complete, the performance-based contract under which Mckinsey were hired required changes. Going forward, we will pay Mckinsey only for specific expertise.

All the remaining Operation Pride initiatives are being implemented by the KQ team under a Chief Transformation Officer, within Kenya Airways.

In a nutshell, Operation Pride is in cruise mode and there’s no turning back. Kenya Airways’ prospects are shining brighter by the day.

The dark days are certainly behind us. We may not be there yet but the gains so far achieved under Operation Pride are something to be proud of. I urge all Kenyans to support the national carrier as it enters its next phase of growth as the Pride of Africa.