KENYA: Kenya Airways Halts Flight From Nairobi To Mombasa Because Of A Bird Strike

A Kenya Airways flight heading to Mombasa was on Friday morning forced to make an about turn after a bird strike caused an engine glitch.

According to the airline, flight KQ604 departing from Nairobi to Mombasa at 10.15 am encountered a bird strike.

This was two minutes after take-off and as a standard precautionary measure, the pilot decided to turn back, landing safely at 10.27 am.

We are glad to report that all the 87 passengers and five crew on board are safe, the airline said.

The passengers have been redistributed to KQ 608 and 616 which have been upgraded to Boeing787.

Kenya Airways has apologised to affected passengers adding that engineers are currently assessing the damage on the affected left engine of the Embraer E190.

A bird strike - bird ingestion - is a collision between an aircraft. It is considered a significant threat to flight safety.

Although there is no absolute figure on the number of accidents caused by bird strikes, a report by the International Air Transport Association (IATA) shows 1300 of such cases are reported annually in US alone.


Tourism Observer

KENYA: Kenya Airways Passengers Stranded At Ksumu Airport After Engine Problems

Tens of passengers were left stranded on Saturday afternoon after a plane engine failed to start even after the pilot tried several times at the Kisumu airport.

Passengers stormed out of the plane as they demanded to be allocated a different flight.

Most of the passengers in the flight had booked a KQ flight but were forced to use a low cost one.

For over 30 minutes, the travellers caused chaos at the airport as they demanded that they are given another flight.

Passengers had booked a KQ flight from Kisumu to Nairobi, which delayed and they were moved to Jambo Jet.

The right engine has failed to start, for 20 minutes now. The captain says that we wait for another 15 minutes to try, said a disappointing passenger.

In a video making rounds on social media, the travellers are heard shouting to airport staff demanding that they either fly together or they get back their money.

In a tweet, Kenya Airways asked Ms Millicent Chuchu who had questioned them over the saga saying that they were dealing with the problem.

“@KenyaAirways do something urgently at kisumu Airport flight delayed from 3.55pm no resolution till now,” tweeted Ms Chuchu.

And KQ responded: “Hi, we are working on a solution. Kindly consult our team on ground for further assistance.”


Tourism Observer

KENYA: Kenya Airways Acquires $42.6m From Banks As Part Of Capital Restructuring At The Airline

Eight Kenyan banks including Equity and KCB have advanced national carrier Kenya Airways additional loans amounting to Ksh4.3 billion or $42.6 million as part of the ongoing capital restructuring at the airline.

The new debt is backed by government guarantees, protecting the lenders from the national carrier’s default.

The airline, known by its international code KQ, defaulted on the lenders’ initial facilities of Ksh16.7 billion ($165.3 million) and instead issued them with shares amounting to a 38.1 per cent stake as a compromise settlement.

Other banks that participated in the new lending to KQ are Commercial Bank of Africa, I&M , National Bank of Kenya, Diamond Trust Bank, NIC Bank and Ecobank.

Jamii Bora Bank and Chase Bank, who were in the original lending scheme, did not participate in the latest debt deals which occurred between April and December last year.

The same banks with the exception of Chase Bank (Kenya) Limited and Jamii Bora Bank Limited gave a new term loan to the company amounting to Ksh4.3 billion ($42.6 million), says the airline.

The new loans have an average interest rate of 7.2 per cent, significantly below the risk-free rate of 10.9 per cent on one-year T-bills.

The debt is scheduled to mature in 2027 and the government has committed to redeem it if KQ will be unable to repay the banks at that time.

The airline says the government has already issued guarantees worth Ksh1.4 billion ($13.9 million) to this end, with the backstop set to be enlarged in the coming years in line with the banks’ commitment to issue a total of Ksh17.5 billion ($175 million) worth of new loans to KQ.

The new debt is meant to fund refurbishment of aircraft engines and general business operations.

Besides the local banks, the African Export-Import Bank (Afrexim) of the United States also secured government guarantees for the loans it is advancing to KQ including for purchase of 10 Embraer E190 aircraft.

The airline is still in financial distress, raising the prospect that the government will step in to pay some of its obligations.

KQ says its debt service coverage ratio did not meet the threshold set on one of Afrexim’s loans as of December.


Tourism Observer

KENYA: Kenya Airways May Merge With Kenya Airports Authority

Kenya Airways may merge with the Kenya Airports Authority (KAA) as part of a grand plan to deepen the airline’s recovery and maintain Nairobi’s status as a regional transport hub.

A policy paper which got the Cabinet’s approval on Tuesday, says the aim is to reposition KQ in a similar fashion as its main rivals, including Ethiopian Airlines and Emirates Group, which have relied on government backing to expand their reach.

The move also appears to be in reaction to the financial difficulties the carrier has continued to experience even after last year’s completion of a major financial reengineering drive, causing concern that it may not be able to withstand competition in the very near future.

Should matters remain in the current state, KQ, the biggest revenue driver for JKIA - Jomo Kenyatta International Airport, may collapse or significantly reduce operations within the next year.

JKIA will downgrade and eventually be relegated to the status of a regional airport as no foreign carrier will develop JKIA for the benefit of Kenya, KQ and the KAA said in a proposal document to the Cabinet.

The policy document named Project Simba notes that the carrier’s recent financial restructuring to the tune of Ksh75 billion ($750 million) was insufficient to resolve its challenges.

Project Simba says that the airline’s fortunes must now be hooked to a comprehensive national aviation policy.

Through a public-private partnership (PPP) that could be signed by September, Kenya Airways will take over all the staff and operations of the KAA in a move that will at once expand the range of its services to include ground handling, maintenance, catering, warehousing and cargo.

It is also envisaged that a special economic zone will emerge around the country’s main aviation hub, JKIA.

The government is further expected to support the joint venture by exempting it from certain taxes and allowing it to retain several levies as part of the plan to stop financial haemorrhage at Kenya Airways and bolster JKIA’s status as an East African aviation hub.

KQ chairman Michael Joseph, who helped craft the plan said finer details, including the new entity’s corporate structure and its implications on the airline’s shareholders, will be worked out in due time.

It is still early days. All the pending issues will be discussed, Mr Joseph said.

Michael Joseph said the government needs to stop looking at KQ as a profit centre on its own but should use it as a tool to deliver wider economic benefits, including attracting foreign tourists and multinationals seeking to establish regional headquarters in Nairobi.

While JKIA is fully owned by the government through the KAA, KQ’s ownership includes private investors whose interests will be addressed through the appointment of transaction advisers and the refinement of the project details.

The government’s stake in the airlines stands at 48.9 per cent, followed by 10 local banks (38.1 per cent). The rest of the KQ shares are held by local and foreign institutional and individual investors.

In contrast, KQ’s rivals such as Emirates, Ethiopian Airways, Qatar Airways and RwandAir are fully owned by their respective governments in what makes it easy to build synergies between the carriers and their home airports.

The proposed project is expected to help KQ add a minimum of 23 aircraft and more than 20 new international destinations over the next five years.

This, in turn, is projected to lift annual passenger numbers to 6.9 million from the current 4.1 million.

Fundamentally, the joint assets will result in synergies, boosting airline-related revenues, increasing exports of goods and creating 25,000 to 30,000 jobs in the future, the parties said.

It is envisaged that the PPP will have the KAA as the contracting authority and KQ as the private party.

The concession, which will run for a minimum of 30 years, will be held by a special purpose vehicle (SPV) that will be fully owned by the national carrier.

The concession will have variable and fixed fees, with the latter earmarked to settle the KAA’s current liabilities that amount to Ksh5.1 billion ($51 million) per annum.

The government is ready to tweak tax laws to afford the project the necessary fiscal space to implement the ambitious plans.

These include exempting the SPV from valued added tax and exempting KQ from paying the Railway Development Levy and import declaration fees on aircraft, parts and utilities.

Kenya Airways is on track to solvency and is banking on route expansion, cost optimisation and improvement of service after posting a $60.4 million loss.

During the year the carrier restructured its balance sheet and reduced its annual debt payment obligations, allowing it room to revamp its operations.

In his first year as chief executive, Sebastian Mikosz has seen the airline’s loan repayments drop significantly to $91 million, from $250 million in the year to March 2017.

As at December 2017, the airline’s total debt stood at $1.39 billion, with total assets of $1.4 billion. Its operating profit stood at $13 million, from $8.97 million the previous year.

The results are an improvement from last year, when it posted an after-tax loss of $99.6 million. The airline is now seeking partnerships, new routes and cost optimisation to complete its path to recovery by 2020.

We will next month seek the board’s approval to add more than 20 new destinations in Africa, Europe and Asia over the next five years.

We plan to use the five aircraft Kenya Airways sub-leased to other carriers to build capacity and carry additional passengers, Mr Mikotz says.

The airline will this year take back two Boeing Dreamliners sub-leased to Oman Air, with one of them expected in the country by September, which it plans to use to ply its New York route starting October and is expected to boost KQ’s revenues by between eight and 10 per cent.

The other Dreamliner and the three Boeing 777-300 aircraft leased to Turkish Airlines will be returned to the airline by end of next year.

We are looking at at least one European and one Asian route on top of the African network. We might announce two to three new routes to start operating next year, Mr Mikotz said.

Airline chairman Michael Joseph also said they plan to partner with other airlines.

We are discussing with South African Airways to join forces on aircraft repairs, route sharing and other issues. For instance, we fly to similar destinations in Africa, so why not share these? Mr Joseph said.

This year the airline also changed its financial reporting date from March to December in-sync with other aviation players such as travel agents, financiers and lessors.

Right now, we are restructuring the business, finding ways to increase revenues and keep costs manageable, Mr Joseph added.

The $60.4 million loss, the airline said was due to the 14 per cent increase in fuel costs mirroring global fuel prices, and a 20 per cent drop in customer numbers.

Last year the carrier airlifted 3.4 million passengers during the nine months to December earning $808 million, but its operating costs consumed $795 million.

This was a drop from 4.2 million carried in the previous year, which the airline blamed on the prolonged electioneering, which saw passengers change their transit points from Nairobi to other African airports.

KQ’s equity stood at $4.17 million in the period under review compared with negative $450 million in the year to March 2017.

The change in fortunes stems from a complex restructuring late last year, during which its main creditors, including 10 local commercial banks and the government converted $442 million loans into equity.

This saved it from downfall as part of a $2 billion debt restructuring programme.


Tourism Observer

KENYA: Kenya Airways Boss Mbuvi Ngunze To Step Down Next Year

The Chief executive officer to the embattled Kenya Airways has announced that he would quit his job in the first quarter of next year, without stating the exact time he would do so.

Mr Mbuvi Ngunze , who has served the troubled airline for five years and two years as CEO and group managing director said that it was natural in the company’s evolution to pass on the baton.

“While I regret this decision, I respect his position. Mbuvi will stay on until a successor is found which is expected to take some months,” Mr Michael Joseph, Kenya Airways board chairman said on Thursday in a statement.

Mr Micheal said he would lead the selection of the next CEO together with the Board Governance and Nominations Committee in what he termed as a “thoughtful process which will focus on producing the right outcomes to lead KQ into its next chapter.”

He added: “I hope to complete this process within the next 3 months and I have already started the process to search for and identify the right candidate with the relevant airline experience.”

Mr Ngunze, who earlier worked as the Chief Commercial Officer, will not immediately leave the airline, although there are suggestions that he’s stepping down due to pressure from trade unions.

“During this period, the Board Chairman and the Group MD and CEO will work with the rest of the KQ senior leadership team to ensure continuity during the transition.

Hence, this should not negatively impact our collaboration with our business partners, financiers and other stakeholders,” Mr Micheal noted.

The Kenya Airlines Pilots Association (Kapla) had earlier called for resignations of top bosses at the airline, including former Chairman Denis Awori and Mr Ngunze.

Mr Awori resigned after 11 months in what was seen as a move by treasury and the largest shareholders KLM, to appease KQ’s employees.

The past months had seen pilots go on strike and were threatening to organise another one if the top leadership at the airline was not changed.

Kenya airways released its half-year results last month, announcing a Kshs4.8 billion loss.

However, the airline board chairman delinked Mr Ngunze from the challenges facing the airline saying: “Although I have to date only worked with him for a short while; it has indeed been my privilege to work with Mbuvi so far. I know that over the last 2 years as Group MD and CEO, the Board has seen the dedication and selfless approach to work that he has had.”

He added that Ngunze has led KQ during an extremely challenging period, but nonetheless brought his unique leadership skills to bear, ensuring that the airline stayed afloat.

Kenya Airways Pilots Strike

Kenya Airways (KQ) faces further turbulent times.Airline finally resumes cancelled flights but pilots insist strike still on from tomorrow Yesterday, the airline had cancelled five flights to various African countries as go-slow by its outsourced staff begun to weigh on its operations.

And last evening, the airline announced that operations had returned to normalcy adding that 67 flights had taken off “from the around the network as at 4pm Kenyan time.”

The flight cancellations were occasioned by a strike by at least 500 employees outsourced by KQ through Career Direction Ltd (CDL) who began work boycott last Friday.

Flights 600 to Mombasa, 432 to Kilimajaro, 350 to Juba, 706 to Lusaka/Harare and 740 to Maputo were cancelled after their crew failed to report to work. Flight 782 to Livingston/Cape Town was also delayed, leaving hundreds of travelers stranded.

This month alone, the airline has cancelled or delayed flights twice, putting the ‘Pride of Africa’ into more troubles.

On October 2, KQ delayed flights at Moi International Airport and Jomo Kenyatta International Airport (JKIA).

The contracted employees have decried poor remuneration, which they want addressed by the airline that has continued to post huge losses despite its efforts to cut down on its wage bill by outsourcing crew and other low cadre employees.

“Some of our outsourced staff including cabin crew have stayed away from work from Friday and we are working with their employer to resolve any issues they may have,” KQ said in a statement.

“Despite our effort to solve the problem by combining several flights, we have made the difficult decision to cancel some as the safety of our guests is paramount,” it added.

Further chaos is expected as the pilots, despite a court order, have insisted that their strike notice that expires early tomorrow morning is on.

Yesterday, the Ministry of East Africa Community, Social Protection and Labor announced that it had convened a conciliation meeting today between various parties to seek an amicable settlement on the issues that have given rise to the pilot’s strike notice.

“The separate meetings involving conciliation committee members, staff union representatives, KQ management as well as Cotu and FKE will take place at the ministry’s boardroom from 9am,” said the ministry’s Director of communications, Kaplich Barsito.

Kenya Airways has announced that operations have resumed and that there will be no interruptions.

In a press statement posted on its Twitter page, KQ said that 67 flights have taken off since 4pm and that scheduled evening flights will leave as planned.

Earlier, Kenya Airways had cancelled several fights scheduled for Sunday morning and delayed another after several outsourced crew failed to report to work.

In a statement issued Sunday morning, the national carrier said the staff, including cabin crew had stayed away from work since Friday due to issues with their employer.

“As per the safety regulations that the airline abides to, minimum number of cabin staff per aircraft type is require and on some of our flights we were unable to reach these levels,” the statement said.

The cancelled flights were KQ 600 to Mombasa, KQ 432 to Kilimanjaro, KQ 350 to Juba KQ 706 to Lusaka/Harare, KQ 740 to Maputo, KQ252 to Dzaoudzi and Moroni, while flight KQ 782 to Livingston/Cape Town was delayed.

The statement added that travellers in the affected flights would be re-booked on other flights or airlines.

The airline is grappling with a strike threat by members of the Kenya Airline Pilots Association (Kalpa), who have said they will down their tools on Tuesday despite a court order barring the industrial action.

Should the pilots go ahead with the strike, this could be a financially costly standoff for the troubled airline that is trying to fly out of turbulence.

However, despite the staff hitches, the airline said on its twitter page that it "operated 60 flights out 72 scheduled today".

Kenya Airways, already facing financial difficulties and a threatened pilots' strike, cancelled five flights on Sunday after outsourced cabin crew walked off the job.

While the stoppage only involved a small number of workers, it coincides with a deep malaise at the airline, which in July posted a net annual loss of 26.22 billion shillings ($250 million/230 million euros) -- the worst ever since its privatisation in 1995.

The losses follow a series of disastrous strategic decisions touching on maintenance costs, a hedge on fuel prices and rising dollar-denominated loans.

"Some of our outsourced staff including cabin crew have stayed away from work from Friday and we are working with their employer to resolve any issues they may have," Kenya Airways said in a statement on Twitter.

"As per the safety regulations that the airline abides to, minimum number of cabin staff per aircraft type is required and on some of our flights we are unable reach these levels," it said.

The dispute forced the carrier to scrap flights to the Kenyan city of Mombasa, Kilimanjaro (Tanzania), Juba (South Sudan), Maputo (Mozambique), and a further flight to Harare, Zimbabwe, via Lusaka, Zambia. No intercontinental flights were affected.

On Friday, some 700 outsourced workers employed by Career Directions Limited complained they had spent six years being retained on one-year contracts and demanded their wages be aligned with those of Kenya Airways' staff.

Kenya Airways faces a strike on Tuesday by disgruntled pilots who have for months been expressing a lack of confidence in the managerial team.

The pilots' union KALPA said last week they would stop work for a week if management did not step down.

The airline, which later this month will release half-year results, responded by obtaining a court order to bar industrial action.

On Thursday, Transport Minister James Macharia said a strike would amount to "national sabotage."

Loss-making national carrier Kenya Airways canceled several flights on Sunday after some crew members failed to turn up for work, the latest blow as the airline struggles to avert a strike called by its pilots.

"Some of our outsourced staff, including cabin crew, have stayed away from work from Friday and we are working with their employer to resolve any issues they may have," the airline said in a statement.

Flights to the Kenyan city of Mombasa, Kilimanjaro in Tanzania, Juba in South Sudan, Lusaka in Zambia, Harare in Zimbabwe and Maputo in Mozambique were canceled because there were not enough crew members to fly safely.

Kenya Airways later said that normal service had resumed but offered no further details.

Pilots union KALPA has called an indefinite strike, scheduled to start on Tuesday, to protest against the management of the airline, which is part owned by the government and Air France KLM.

The union said its members had lost confidence in the ability of the airline's chief executive and chairman to end years of losses. On Friday, a court ruled the strike was illegal and the government had said it would be "economic sabotage". On Thursday, the airline said it had halved its pre-tax loss to 5 billion shillings ($49.4 million) in the past six months thanks to a recovery in passenger numbers.

KENYA: What About Kenya Airways

The news from Kenya Airways is bad. It registered a staggering Ksh26.2 billion ($262 million) loss this past year. M
ore than the staggering loss of the previous year. Despite reports that its passenger numbers were up by 4 million.

That its income from handling was also up. That, relative to the previous year, its revenues were up by Ksh6 billion ($60 million).

It took drastic cost-cutting measures. It sold its parking slot at Heathrow Airport. It sold two of its planes. None of which has made a difference.

The public has a stake in KQ. Partly because we still publicly own about a quarter of it. Partly because individual Kenyans are shareholders in it. Partly because, as its slogan proclaims, it’s meant to be the “Pride of Africa.”

But it isn’t. Anecdotally, that accolade is increasingly given to Ethiopian Airways.

Both airlines, together with South African Airways, have significantly opened Africa up to itself. No more travelling to Europe to come back down in West Africa.

No more matatu-like, nerve-wracking (if entertaining) experiences in cross-continental travel on the infamously named “Air Peut-Etre” – Air Maybe, meaning maybe the plane will arrive, maybe it won’t.

Maybe your suitcase will make it on board, maybe it won’t. Maybe it’ll take off on time, maybe it won’t. Maybe it’ll get you there safely, maybe it won’t.

Travelling west was hair-raising till the mid-1990s, when finally those three airlines made it a predictable process. In KQ’s case, enabled by the KLM partnership.

Initially, at least, that partnership also ended the political annoyances that previously accompanied any KQ travel.

Like heading to the airport for a plane down south, only to be held hostage at the airport, together with a couple hundred other passengers, for almost half a day. Why? A Kenyan minister had commandeered the plane.

So the goings-on of the past year or so are disturbing. Many explanations have been given. That the investments in new planes to service all the new African routes (as well as new routes into Asia) always meant a dip in profitability.

That loans for those investments, being dollar-denominated (at interest rates inexplicably well above European averages) meant huge exchange losses as the shilling steadily depreciated.

That fuel hedging — to protect us from oil price volatility — instead locked us into fuel prices well above the current prices.

It’s hard to make sense of. But what we can make sense of is relative costs and relative comforts. From a consumer perspective, KQ is increasingly not the best bet.

Its tickets are consistently higher than other options; it only retains its customer base because many like flights that are as direct as possible. Its comforts are ever more Spartan, annoyingly so.

KQ’s cost-cutting gurus may think we don’t notice the absence of salads or cheese or the overall shift in airline food suppliers to companies associated with the political who’s who. But we do.

They may also think we don’t notice the headsets that never get fixed. But we do. Or the second-rate entertainment products (despite the admirable push for more Kenyan content). But we do. Or the steady creep back of flight delays. But we do.

Unless delays and pricing go down, while services go up, KQ’s supposedly increased customer base will not be sustained.

KENYA: Kenya Airways Begins Forensic Audit

Critics, some civil and others not so civil, of Kenya Airways' will find that the wind has just been taken out of their sails when news broke earlier today that the airline has commissioned a forensic audit in circumstances of how the losses of last year have come to be.

The Board of Directors of KQ in February resolved that such an audit is important and necessary to look into the finer details of past operations and learn from it and subsequently issued the following statement for the general public:

The Kenya Airways Board in February commissioned a forensic audit as part of Operation Pride to be conducted over three months. The Board appointed Deloitte Consulting to perform the audit which will support the improvement of our systems, processes and activities.

The objective of this exercise is to identify areas of weaknesses and give recommendations that will complement the ongoing turnaround strategy. As part of the audit, Deloitte has set up a hotline to report any concern about the company.

This hotline is operated and controlled independently by Deloitte.

Toll free number in Kenya: 0800722626 - accessible from Safaricom and Airtel / YU mobile networks only; not accessible from fixed line. You can also reach them online.

Email: KQ. Website: www.tip-offs.com.

The Board welcomes any report that may assist the company improve its operations, and also any concerns for investigation suppliers or persons dealing with Kenya Airways may have.


It is understood that the airline hopes to get facts rather than innuendo and speculation as often splashed across Kenya's social media scene by known individuals who have turned into a fifth column against their national airline.

This therefore is the time for the public to speak up, competently and factually.

KENYA: Liberalisation Of Regional Airspace Hands KQ Lifeline

Kenya is among four countries grafting a new aviation plan that could hand the ailing national carrier a new lease of life.

Other countries are Uganda, Rwanda and South Sudan.

The four countries, which initially broke away from the East African Community to form the Northern Corridor Summit, are on the verge of concluding talks to form a one airspace area.

The plan was initially raised by South Sudan President Salva Kiir and his Ugandan counterpart Yoweri Museveni as a way of dealing with Kenya Airways’ high ticket prices.

KQ TURNAROUND

However deliberations on the matter look set to turn around KQ’s fortunes.
Officials in charge of aviation in the ministries of transport of the four countries and their directors have agreed to liberalise the regional air space.

Effectively, the agreement could see Kenya Airways and RwandaAir, the only two operational national carriers, assume the role in the four countries opening them to bigger volume of business.

The two airlines will get full benefits of a national carrier in South Sudan and Uganda airspace.

Regional Director (Eastern and Southern Africa (ESAF) in the office of the International Civil Aviation Organisation (ICAO) Council, Mr Barry Kashambo said a liberalised airspace will reduce fares and increase flexibility in travel.

“The whole process is aimed at eliminating restrictions and providing guiding principles that will promote and ease movement of persons, goods and cargo by air,” Mr Kashambo told Smart Company by phone last week.

“The eligible operators such as those in Kenya will then access a wider market increasing their revenue.”

Mr Joe Nyagah, the head of the Northern Corridor Integration Projects Summit in Kenya, said the arrangement would be fully operational by January 2016.

“We are hoping to get approval from heads of state. Ministers of Uganda, Kenya, Rwanda and South Sudan will approve the deal in a meeting set before the end of September,” said Mr Nyaga.

PRESIDENTIAL DIRECTIVE

Together, the four countries will negotiate air service agreements with foreign countries as one bloc.
The greatest benefit is expected to come from the classification of flights between the four countries as domestic, building on the recent move to allow use of national identification card as a travel document to ease movement within the bloc.
“Partner states should develop budgets and work plans for the establishment of a seamless Northern Corridor airspace bloc and report progress during the 11th summit,” said a directive signed by Presidents Uhuru Kenyatta, Paul Kagame of Rwanda, Yoweri Museveni and Salva Kiir at the June summit meeting in Kampala, Uganda.

The 11th summit was expected to have taken place this month but it was postponed due to tight schedule of the heads of state.
Those privy to the talks say Kenya has taken the lead role as this is now seen as a key strategy to revive the national carrier which recorded a staggering Sh25.7 billion loss in the 12 months to March 31, 2015.

The carrier attributed the loss to competition from Middle East carriers, high operating costs and cancellation of flights to West Africa.
“… this loss is obviously significant. It is, however, important to know that we have made significant investments at a time when the industry generally was going through hard times,” KQ Chief Executive Officer Mbuvi Ngunze said when he released the airline’s financial report.

KENYA AIRWAYS WOES
A senate committee chaired by Kisumu Senator Anyang Nyong’o is currently inquiring into the troubles that are threatening to ground the airline.
The government through the National Treasury also plans a turnaround strategy that could see the board of Kenya Airways and the top management sent home.

The government is currently the largest shareholder in the airline, followed by KLM, the Royal Dutch Airlines.
The huge loss has motivated Kenya to encourage other countries to speed up the talks.

At the Northern Corridor Summit discussions, fears are rife that RwandaAir or any other airline plying the East African region could face a similar setback.
According to Silas Udahemuka, Director-General, Rwanda Civil Aviation Authority (RCAA), liberalisation of the air space would reduce the cost of doing business and increase revenue for national carriers.
Under the East African Community, member countries already have a framework on the liberalisation of air transport.
It is envisioned that the application of the agreed framework will lift all barriers related to capacity, frequencies, city pairs, cabotage (the exclusive right of a country to operate the air traffic within its territory) and designation of airlines.
EAC Principal Aviation Officer Engineer Ladislaus Matindi said in a statement that member countries earlier on failed to agree on air space harmonisation.

MANAGEMENT PROBLEMS

The bone of contention was whether there would be fair competition and a level playing field for both big and small airlines.
“Some Partner States with small and weaker airlines are concerned that full liberalisation may lead to the disappearance of their airlines as a result of anti-competitive behaviour such as abuse of dominant position by the bigger airlines,” Matindi said.
However, the headwinds that have buffeted KQ have awakened the region, with the Northern Corridor partners now warming to the agreement.

Regional countries currently rely on bilateral agreements to access each other’s air space.

Uncompetitive domestic and Bilateral Air Services Agreements (BASAs) regulatory regimes, fiscal policies such as airport taxes and limited subsidisation are to blame for the sector’s slow growth.
The sector is also highly subsidised globally, has high insurance premiums and suffers from management inefficiencies, security and safety concerns.
East African Business Council Executive Director Ms Lilian Awinja told Smart Company that a common air space arrangement will not only save KQ, but lay a vibrant business environment for regional carriers.

KQ PROBE
In the ongoing probe on KQ, the senate committee chaired by Anyang’ Nyong’o has found that 66 KQ staff lack work permit. The airline also retrenched 477 employees in 2012 citing poor financial performance and declining profitability.

However, the airline went ahead to employ 517 foreign workers through a recruiting agency.
The issue of employment at KQ is among the issues that have caused resentment between workers and management.
The Senate Select Committee has also gathered evidence from the airline’s operations revealing strategic errors that have pushed the flag carrier to its current sorry state. Expensive tickets has seen passengers leave in droves to competition.
“Many traders give the airline a wide berth because of sky-high ticket prices.

Commercial department is doing the airline a disservice by setting the fares far higher than the competition,” says James Kariuki, chairman of China-Dubai traders association, adding that in some routes ticket prices could be higher by a mind-boggling 200 per cent.
The carrier is also accused of poor customer relations as well as frequent cancellation of flights.
Standard Bank investment analyst Eric Musau said the airline could completely be grounded if no urgent steps are not taken to revive it.

He said the airline risks losing all its assets to creditors.
KQ plans to sell four of its older planes to raise cash that will bail it out of the mess.
It is expected that the new regional plan to liberalise airspace could help Kenya Airways to fly smoothly again.

IATA STUDY

International Air Transport Association has conducted several studies on liberalised air space noting big progress in terms of economic growth and passenger numbers.
A study of the European Union single aviation market found that liberalisation resulted in many more new routes in addition to a 34 per cent decline in discount fares in real terms.
IATA also stated that a 10 per cent increase in international air services led to a 0.07 per cent expansion of GDP.
In the early 2000s, Kenya and South Africa agreed to have a more liberalised air market leading to a 69 per cent rise in passenger traffic.
South Africa and Zambia also have an arrangement to allow operations of low cost carriers from Johannesburg to Lusaka, resulting to 38 per cent reduction in discount fares and 38 per cent increase in passenger traffic.
IATA estimates that if the regional market is liberalised, then annual passenger movement in Kenya will increase from half a million up to 1.2 million in the first year.

The increment will be caused by several million passengers who will start travelling by air, but who are currently unable to do so for reasons of cost, flight availability or convenience.

KENYA: Kenya Airways Defends Exorbitant Tickets

Kenya airways has defended its air ticket prices from the Jomo Kenyatta International Airport saying the charges are considerate.

It said its prices are higher from JKIA since it offers direct flights, compared to other airlines which take up to double the time to reach destinations.

The airlines fence of its pricing comes after the Star carried out an online booking survey on KQ's prices from Nairobi to other destinations for the next two weeks which established they are three times expensive on some routes.

Corporate communication manager Wanjiku Mugo said every airline offers cheaper prices to its hub from other airports to attract traffic.

"Every airline is expected to be strong at home. When we fly from Ethiopia for instance, we offer cheaper prices to bring traffic home before flying out. This is common in the aviation industry," said Wanjiku.

She said the major factor influencing ticket pricing is time the booking is made and flight duration.

"For instance we take eight hours from Nairobi to London, another airline takes up to 19 hours because they have to go back to their hubs. The prices can't be the same," she said.

Airport taxes also add up to the cost of flight hence influencing the ticket prices, she said..

She said early bookings are cheaper, with the current window allowing bookings between 28 and 42 days.

Wanjiku said KQ is in talks with government to develop JKIA as a strong hub to attract more traffic, a move the Middle East carriers are cashing on as transit hubs making their airlines cheaper.

According to Wanjiku, the airline re-designed JKIA services in May, reducing connection time by 20 per cent.

On Tuesday, the Consumer Federation of Kenya secretary general Stephen Mutoro warned that Kenya Airways is losing out to rivals due to high fares.

Mutoro said the carrier which is currently struggling to recover from a massive loss has overpriced itself, despite low quality services and delays..

"London Nairobi route, KQ still expensive as compared to BA (British Airways). Needed a last minute ticket, the difference in price was a whopping £400 (Sh65,639) yet they are both direct flights," said an online reader.

KQ has been on the spotlight since it announced a Sh29.7 billion full year pre-tax loss.

KENYA: Kenya Airways Dreamliners Stranded In US Factory

Two Boeing 787 Dreamliners ordered by Kenya Airways (KQ) have been put in storage in the United States due to a political battle in Washington that has killed financing for the deal.

The two advanced passenger aircraft, each with a list price of about $225 million, remain stranded at a Boeing facility on the US West Coast as the troubled Kenyan carrier seeks to arrange alternative financing for the planes.

The 787s are the final two in a package of nine Dreamliners that KQ agreed to purchase from Boeing.

KQ was able to take delivery of seven other planes during the past 18 months, partly through an $835 million set of loan guarantees made by the US government-operated Export-Import Bank.

But the bank ceased operations at the end of June. Republicans in the US Congress blocked renewal of the bank's charter on the grounds that its subsidies to major corporations such as Boeing amount to anti-competitive "crony capitalism."

The holdup in delivery of the two Dreamliners represents another headache for KQ, which recently reported a $293 million loss.

The airline is trying to sell off four older Boeing-made planes to help stabilise its finances.

Acquiring the 787s could enable KQ to save money.

The new jets "feature a lightweight composite construction that boosts fuel economy."

KQ is reportedly working with Boeing to arrange new financing for the two Dreamliners through the Cairo-based African Export-Import Bank and a private company based in New York and Ireland that serves as a source of capital to the global aviation industry.

The White House has meanwhile expressed hope that Congress can reach a deal to re-authorise the US Export-Import Bank when lawmakers return on September 8 from a summer recess.