BY MBUVI NGUNZE
A lot of untruths and innuendos have recently been peddled in the media and other circles regarding Kenya Airways. Given the airline’s pivotal role in not only Kenya’s economy, but to the region, and its valuable contribution to giving Kenya visibility on the global front, these statements cannot go unchallenged.
But before I delve into this, allow me to first state that all businesses have challenges. More so in our industry which is cyclical in nature and fraught with many risks. These include fuel price volatility, intense competition and more recently the threat of terrorism and epidemics that have adversely impacted global travel. There is also political instability, natural disasters and an increasingly tight regulatory environment and KQ is not isolated from any of these. KQ has expanded its global footprint across multiple jurisdictions flying to 52 destinations. As a global airline, we are governed by stringent international aviation rules that we must adhere to.
Strong consumer activism in some markets like the European Union has imposed high costs of operations in cases of schedule interruptions.
But it has not always been doom and gloom. Over the last decade, Kenya Airways worked hard to successfully shed the image of an ailing airline dependent on government lifeline. Since it was privatized in the late 1990s, the airline grew rapidly, lifted by strong fundamentals and embracing a culture of competitiveness and innovation. Before the current spate of challenges, Kenya Airways was one of the most profitable airlines even earning the ‘Most Respected Company in East Africa’ accolade.
Are we in debt? Yes we are. Is this normal for airlines? Most certainly. The question is one of balance for both long term and short term debt. Long term debt is the norm for financing asset acquisition together with equity. In the short term, we are experiencing a tight liquidity position driven by our business environment, hence the work we are doing on refinancing our commitments and raising cash for working capital.
Were we too ambitious in our plans? Only time will tell. KQ from 2002 to 2011 grew from a turnover of Sh25 billion to over Sh100 billion, in the same period. It only made a loss in 2009. Against this backdrop, the Board embarked on a second phase of growth and renewal with mixed results thus far. We have a modern fleet that allows us to compete more effectively in a different competitive environment where service and quality count. In acquiring or leasing our fleet, we do this with internationally reputable companies in the aviation space with no local intermediaries contrary to speculation. Being a publicly quoted company, we have clear governance rules and reporting requirements that are well articulated in our annual report.
Operationally, we have seen significant improvements over the last two years both in on time performance and service. In the last month though, we have had significant disruptions to our schedule integrity which has regrettably impacted our loyal customers for two reasons. Firstly, the change of schedule due to the runway closure and attendant internal adjustments we have had to make. Secondly, we have had labour relations issues with some of our pilot community which in some instances has led to last minute flight cancellations or delays. We remain optimistic that we will find amicable solutions to these challenges.
Despite the present situation, there are many reasons why Kenyans should be proud of their national carrier. Besides being one of Africa’s leading airlines, Kenya Airways is central to the region’s tourism and business interests, ferrying tourists and investors. The airline has built an enviable network across the African continent so much so that other nations are entirely dependent on Kenya Airways to connect to the rest of the world. Nairobi is indeed the hub for the region because of this connectivity and a significant number of multinationals have made decisions to be based in Nairobi for this reason.
The airline is also one of the largest employers in Kenya with over 4,000 direct employees, not to mention the significant direct and indirect benefit from its expansive business ecosystem.
So, whereas KQ may today be grappling with challenges, what is important is that we stay focused in delivering on the wider promise. I want to take the opportunity to celebrate the men and women of KQ right across the network who work hard to deliver on the guest promise and have been at the heart of building this company. I am proud to lead such a dedicated and passionate group contrary to assertions that staff are not engaged. In any company of our size and scale there will always be people who may not have the same passion and energy.
Kenyans therefore need to rally behind their airline. Businesses the world over experience challenges from time to time. What matters most is the measures instituted to put the business on a recovery path and ultimately on a sound footing.
(Ngunze is the Managing Director and CEO of Kenya Airways)