NAIROBI, Kenya, Sep 24 – A team of auditors from PricewaterhouseCoopers (PWC) who appeared before a Senate committee said the losses made by the national carrier Kenya Airways (KQ) were expected but the magnitude was unprecedented.
The auditor’s who appeared before the Senate committee inquiring in to the affairs of Kenya Airways and who audited the company for four years between March 2011-2014 said the company’s woes began three years ago.
“What did I expect from 2015? I expected them to make a loss but not as significant as what was reported,” said one of the auditors.
The four Anne Erikson (Regional Senior Partner), Richard Njoroge (Partner), Edward Kerich (Assistant Director) and Marylinda Ngige (Manager) were hard-pressed to explain whether they offered any advice to the National carrier on realizing that it was on a downward trend.
Richard Njoroge said that when they took over from the Delloitte and Touche which had been conducting audit for 11 years the airline made a profit of Sh5b in the 2011/2012 financial year, but in the 2012/2013 the airline’s profits reduced to Sh2billion while in 2013/2014 financial year they made a loss of Sh10.8billio.
Njoroge attributed the losses to several factors including the economic crisis in the West which he said affected all airlines, the increase in fleet at a time when it was not conducive and also on fuel hedging which failed to work in some instances as fuel prices came down.
“They got into project Mawingu at a time when they thought the passenger numbers would increase but the business environment changed,” said Njoroge.
He also cited the Ebola outbreak which affected West Africa as having resulted in losses as most of the routes were closed.
“The loss in 2015 did not just happen, the airline has been making losses for the last three years,” added Njoroge.
The senators sought to find out what PWC did to rescue the airline.
“As Auditors who have been reporting a healthy balance sheet, are you saying you did not see any sign and you didn’t flag it?”asked Billow Kerrow (Mandera).
His sentiments were reiterated by committee chairman Anyang’ Nyong’o who questioned whether there were specific areas the airline needed to address to restore to its former glory.
The auditors however insisted their contract was limited to tackling financial issues which did not include giving advice on how to get out of any situation.
They also stated that that they had noted the deliberate efforts by various institutions among them government who were keen on keeping the airline afloat and hence their failure to report the issues.
Earlier in the day when representatives from Deloitte and Touche appeared before the same committee they allayed reports of fraud in the airline saying during the course of their probe they had not witnessed any.
“During the 10 years, there was no fraud,” said Samuel Onyango, the company’s CEO.
They also stated over the years, the joint agreement venture between the airline and KLM, had resulted in profits.