Kenya Airways: the respected African airline – an optimistic future? / de Moraes, Ailson.

15 p. 2017, Case study.

Research output: Other contribution

Published

Abstract

In an interview with the Reuters news agency, the CEO of Kenya Airways, Mbuvi Ngunze, said the airline has resorted to reducing the size of its fleet and is banking on the lowered fuel cost to maximize profit in 2016. Kenya Airways has been struggling to keep a balance of its operations and profits after recording pretax loss of $293 million for three consecutive years up to its financial year end of March 2015. But the losses narrowed in the last six months to September 2015. However, According to the CEO, the airline is ‘still in debt’. Kenya Airways is still looking for 200 million dollars in terms of bridge money to allow the airline to have working capital in order to prepare the long term capital structure of the business. The airline is under a restructure again, and this may be not a surprise for an airline company according to the big investor Warren Buffet.
“The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines.”
Warren Buffett
While the words of Mr Buffet are generalised, airlines had seen no real economic profit over a 40-year period to 2012, there were exception. Most noteworthy is Rayanair, the Irish budget airline, which had been consistently reporting earnings in excess of 20%.
The question is: is there anything Kenya Airways could learn from other airlines such as Rayanair to improve its operations and eventually become profitable?
Original languageEnglish
TypeCase study
Number of pages15
Publication statusPublished - 21 May 2017

ID: 26365489