KQ returns to profit as Naikuni to make 2014 exit

November 13, 2013
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The airline's chairman Evanson Mwaniki said that the board had started the recruitment process for a new Chief Executive Officer/CFM
The airline’s chairman Evanson Mwaniki said that the board had started the recruitment process for a new Chief Executive Officer/CFM
NAIROBI, Kenya, Nov 13 – Kenya Airways Chief Executive Officer Titus Naikuni is set to retire next year, as the airline returns to profitability announcing a 108 percent rise in its half year profit before tax results.

The airline’s chairman Evanson Mwaniki said that the board had started the recruitment process for a new Chief Executive Officer.

“We did plan that he leaves at the end of this year, but considering the need to make sure that the company’s 10 year strategic plan is airborne we persuaded him to stay for one more year meaning retiring at the end of 2014 and he accepted the request. In the meantime, the board has directed the staff committee to start the recruitment process for his replacement and I can confirm that that process has already started,” Mwaniki said.

Naikuni joined Kenya Airways in February 2003.

Before that, Naikuni was the Managing Director for Magadi Soda Company and was a member of a team of World Bank sponsored Kenyan technocrats, known as the “Dream Team” that was engaged during the Moi regime to turn around the economy.

He also served as a Permanent Secretary in the Ministry of Transport and Communications between August 1999 and March 2001.

In the half year ending September 30, the airline posted Sh548 million profit before tax from Sh6.5 billion loss recorded over the same period last year.

Naikuni announced that the profit is attributable to the stabilisation of the eurozone economies, favourable prices of jet fuel and a robust business environment in Kenya following peaceful elections in March.

Passenger revenue improved from Sh43.6 billion posted last year to Sh46.8 billion in the period under review with the domestic market increasing in capacity by 17 percent.

“The increase in the domestic market is as a result of introduction of two daily flights to Kisumu including a night stop as well as Eldoret that had been launched in October 2012,” Naikuni said.

The Middle East and Far East regions witnessed a seven percent increase in capacity made possible by the introduction of daily flights to Guangzhou via Bangkok and swapping some directions.

Net capacity put in Africa, excluding Kenya fell by five percent compared to prior year due to suspended services to N’Djamena, Libreville, Bangui, Ouagadougou and Cairo.

“The services were suspended due to management focus on improved performance,” he said.

Capacity offered into Europe shrunk by five percent owing to the withdrawal of all daylight operations on the London route as part of turnaround measures taken by management to trim unprofitable operations.

Despite two additional dedicated cargo planes, uplifted volumes declined by 5.7 percent, following the weak global freight business landscape.

Direct costs declined 6.6 percent to stand at Sh37.3 billion, mainly as a result of lower fuel prices while overheads also declined eight percent to Sh9.4 billion, with the bulk of reduced employee costs year on year by Sh557 million due to a lower staff complement.

The low cost carrier, Jambo Jet will begin operations June-September 2014 and is expected to initially serve domestic routes of Mombasa, Kisumu and Eldoret.

Naikuni said the airline will continue with the aircraft modernization over the next year which is expected to deliver positively on fuel burn rate although fleet costs would rise. Initiatives going on at the Jomo Kenyatta International Airport (JKIA) will see capacity double by March 2014 with the completion of an arrivals terminal, Unit 4 and a temporary terminal which will deliver a 5mn new capacity.

“Kenya Airports Authority will then be able to upgrade Unit 1, Unit 2 and Unit 3 without disruption to airlines,” he announced.

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