TCB’s Miscellaneous Ramblings – February to March 2019

Posted on February 20th, 2019
Categories: Uncategorized

Picking myself up off the floor. Kenya Airways wants to take-over Nairobi’s Jomo Kenyatta International Airport – and it’s not even 1st April.

How can a cash-strapped, consistently loss making airline who can’t possibly know the first thing about operating an airport have ever dreamt this up? Both are government owned* (see para. 8), and perhaps this is where this dream emanated. We are told that the synergy between the pair will result in both entities returning to profit.

Now, who could possibly believe that?

Let’s call a spade a spade – Kenya Airways has lost money for more years than I care to remember, and let me make the point that these are all substantial losses. In the last reported period, the first six-months of 2018 it showed a loss of 4 billion shillings compared to a loss of 5.6 billion for all of  2018. With pundits predicting a loss of 7 billion for the full year 2018.

The Kenya Airports Authority in its last published financial results available to this writer from 2016, on the other hand shows a profit before tax of 2.60 billion shillings – which is probably what Kenya Airways management were drawn to. The worrying part of all this is that this liquidity could be siphoned off to shore-up the airline, leaving precious little to develop and maintain Kenya’s more than 40 other public airports.

A new Chairman, and a new imported Executive team don’t seem to have been able to stem the tide and return the airline to more positive results.

Aside from this new adventure into airport management, the airline has recently made it known that they want to double their aircraft fleet, by leasing-in aircraft over the next 2-3 years. With this, obviously a much larger route network. Whether this will have any positive results to the bottom line is best left to those with rose-tinted glasses.

Don’t get me wrong; I’m a huge fan of the airline. But I don’t like where this is going, don’t like it at all.

Government have termed this joint venture, if you can call it that, a mirror-image of the relationship between Ethiopian Airlines and that countries civil aviation sector. Both wholly government owned, unlike Kenya Airways* which is a publically traded company on the Nairobi Stock Exchange, with the government as a major shareholder, plus a good number of banks (from a previous bail-out), KLM-Air France and a host of private shareholders.

Cost cutting is inevitable, in situations such as this, as it would be at any other company reporting such a loss. However where it affects the customer I take issue. Premium class passengers complain of sub-standard meal offerings with little choice, and limited selection on the drinks trolley – back-of-the-bus, well my kids complained of being hungry on arrival from Europe.

But the big push back it seems is just around the corner. With the CEO saying he see’s no value in Kenya Airways remaining in SkyTeam, and its frequent flyer programme Flying Blue. The aviation press in Europe believes that this is driven by the airlines dire cash flow problems. With most of the world’s airlines in one alliance or another you’d think there was a benefit in belonging. Not so KQ.

Qatar Airways have made noises about pulling out of the OneWorld alliance of late, driven by more political than financial concerns. They have now done an about-face and will remain committed to that alliance.

One happy thought to report is the wonderful smiling happy faces and ‘can-do’ attitude of the employees of Kenya Airways.

The Kenya Constitution stipulates clearly that any partnership such as this must be discussed/debated in public fora across the country. A process was announced, dates and venues set, however after only one such meeting in Kisumu, all further meetings were postponed until further notice. It seems that resistance to this idea is bigger than the government ever envisaged.

Enough, already.

As always my family and I spent the holidays at the village of Watamu on Kenya’s north coast, on what is arguably one of the best beaches in the world. I think I reported previously that Ocean Sports was under new ownership and that plans were afoot for a major makeover scheduled to happen this year. This is now confirmed; and they will hopefully be sharing their plans and dreams with TN readers, as and when.

Sad to say, their chips have gone to the dogs, literally. By copy of this I trust OS management takes note. I’ll be down later in February for another taster, and hope for a better outcome. There you go you naysayers, I’ve said it, referring to acquaintances that believe all I ever report is the good and never the bad. Which is true I’ll admit, but positive good things are surely what you want to read about. Negativity I try to avoid, however I couldn’t help myself with my Kenya Airways rant here.

I was amused by this quote attributed to William Faulkner about Ernest Hemingway “He has never been known to use a word that might send a reader to the dictionary”. Which in a self-effacing way reminds me somewhat of myself.

Happy days!

TCB

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