Kenya Airways Kenya Airways

Kenya Airways reduces loss to $100m on deep cost-cutting

May 28, 2017

Kenya Airways (KQ) net loss narrowed to Sh10 billion ($100m) in the year ending March, compared to a loss of Sh26.2 billion ($262m) it reported last year, signalling improvement in the airline’s fortunes.

Chairman of the airline, Michael Joseph, attributed the improved results to additional routes like Victoria Falls, increased frequencies on its existing network and a 5.4 per cent rise in passenger numbers, which was brought by the airline’s recovery strategy ‘Operation Pride.’

Nairobi Security Exchange-listed carrier, however, posted an overall loss in its overhead expenses which went up by 7.4 per cent, largely blamed on one-off impacts from restructuring process, chiefly, staff reduction. KQ’s total direct operating costs rose to Sh65,356 million up from Sh2,505 million last year as a result of job cuts. In the meantime, the airline said yesterday it had put breaks on staff lay-offs with the turnaround strategy fast showing positive results, and it will instead make a few additions to his management team to boost its turnaround strategy, ‘Operation Pride (OP).’

The OP plan focuses namely on; returning to profitability through revenue enhancement and cost containment, refocusing and resizing the business and model, and enhancing partnerships, as well as restructuring the capital of the company.

“We have already fully implemented 342 initiatives that are delivering value. The changes made have so far resulted, for example, in more competitive pricing, better rates from critical suppliers, improved connectivity at the hub” said the outgoing CEO, Mbuvi Ngunze.

With his pending exit, Mbuvi said the airline has now embarked on Capital Optimisation plan, aimed at reducing the company’s debt and improving its liquidity. “Operation Pride is now our way of doing business.

The routines we established as part of Operation Pride are now embedded and have become our business culture,” he said. The firm’s results, announced yesterday outside its training facility, Pride Centre, marked Ngunze’s last release of KQ financial results as CEO after two-and -a-half years at the helm. Mbuvi is being replaced by a Polish national Sebastian Mikosz as the new chief executive in a three-year contract effective this week.

 

Credit: Mediamax

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