Monday, January 14, 2008

Kenya Airways: Troubles of its own making?

I've been unable to find a right entry price for KQ over the last 12 months because every time I considered doing so, there was an issue that meant the price fell.
  1. Virgin's entry
  2. The corporate email that was leaked
  3. The clash in Cameroon
  4. Disappointing final results for FY 2006
  5. Likely disappointing results for first half of 2007/2008 financial yr.
Having travelled home with them, I can attest that most of the problems look to be internal and may require a new CEO to turn things around. On the outbound journey, we had one hour delay in boarding and an additional half hour to fuel the plane. We only got told about the "fueling". We then got onto the runaway, but couldn't take off because there was a problem with the starter. That took an another one and half hours to fix. We eventually took off 3 and half hours late. KQ would have incurred a fee for being late in taking off and presumably another for landing late at JKIA. Coming back we were an hour late boarding. For lunch, you could have any meal as long as it was beef. So repeat business will be hard for it to get especially on its most important routes revenue-wise.
On the issue of losses due to the weaker dollar, what not trade in more than one currency? Oil prices are harder to deal unless you hedge well.
Bottomline: Change CEO or some of the other managers; reduce routes if unable to run all them profitably or things could go Uchumi-way.

4 comments:

bankelele said...

ulence in the airways

The strain has told on the airline, and it didn't need the post-election crisis to complicate things. Their year ended in september, but H1 of 2008 is not looking good with the reduced travel To kenya. meanwhile charter and smaller airlines have 'enjoyed' the crisi period by serving mombasa, eldoret, kisumu routes

Ssembonge said...

It's not looking good for KQ. Like you said, their ambitous plans may be their own undoing.

Makes me wonder if this has anything to do with political interference. I've always been of the opinion that there is no place for governments in private enterprise.

Their work should be limited to regulation and building a condusive business environment for everyone.

MainaT said...

Banks, AirKenya (a KQ affliate?) is doing business though.
Ssem-KQ's largest shareholder is KLM/AirFrance. Management issues peke yake is what is eating KQ.

bankelele said...

MainaT: There's no link between KQ and Air Kenya who dominate the local tourist flight circut - $100 rountrips to Mara, Lamu, Samburu