Kenya Airways (KQ) recently issued a profit warning stating that it anticipates 25 per cent or more lower earnings for the period ending December 31, 2019 when compared to 2018.
In a notice signed by Kenya Airways Board Chair Michael Joseph, the troubled airline blamed the performance on stiff competition. However, some analysts beg to disagree.
KQ might be in a dire siituation that it will not come out of.
Recently, a traveller from Nairobi to Dubai shared the price of a one-way ticket for Kenya Airways (KQ) and Emirates. The difference wa whooping.
In the screenshot, the cost of travelling one-way from Nairobi to Dubai for KQ was Ksh88K whereas Emirates Airlines charged Ksh40k.
Kenya Airways (KQ) has always been a loss-making firm. Numerous attempts have been made to resuscitate it but the cash cow has always remained an abyss; gulping billions with nothing to show for it.
The airline made Ksh. 4 billion and Ksh. 5.6 billion loss in 2017 and 2018 respectively.
In 2017, the cash strapped national carrier shocked Kenyans when they hired consultancy firm McKinsey and Company for Ksh. 2.3 billion. The money was paid in ten months.
The contract was ended after public uproar. However, KQ clarified that the airline will use McKinsey’s services on a needs basis as opposed to the previous arrangement where the firm had permanently set up shop at the airline.
Before McKinsey, KQ had hired a US-based financial consultancy firm Seabury to advise on its restructuring in 2015.
In the same year, the National Treasury loaned the struggling airline Ksh. 4.2 billion in an effort to surmount challenges brought about by challenges in the West African Market due to Ebola outbreak and increase in fuel prices. KQ had made a net loss of Ksh. 10.5 billion.
Kenya Airways has been cash strapped since its planed fleet expansion dubbed ‘project mawingu’ flopped. Project Mawingu, and other factors, sunk KQ into a Ksh. 25.7 billion loss in 2011.
KQ had ignored advise from audit firm Deloitte.
An Audit by PriceWaterHouseCoopers (PwC) 2011 – 2015 revealed that the airline’s Ksh. 25.7 billion loss was occasioned by a combination of factors accumulated over the years. One of those factors is the delay that happens between ordering and actual delivery of aircrafts. This is a common practice in aviation industry and takes about 4 years.
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