Kenya Airways embarks on aggressive drive towards profitability | Africanews
3 months ago, 8 Mar 02:18
Kenya Airways has embarked on an aggressive campaign for cost savings and premium passengers, after years of losses following a slump in tourism and large debts incurred to buy new aircraft. The campaign is being championed by the airlines’ new chief executive officer who took over the helm in June last year, Sebastian Mikosz. One of Mikosz’s first decisions was to shut the airlines’ outlet in the capital Nairobi’s downmarket Accra Road, which served thousands of small traders who fly to the Far East to buy cheap goods in bulk. We still have to prove that we can produce an operating profit. Polish native Mikosz, who helped turn around flag carrier LOT Polish Airlines as its chief executive, needs to stem those losses before it can begin to pay down $2 billion of debt restructured in November to stave off the airline’s collapse. To achieve this mission, the airline is banking on some upcoming projects: The new economy plus project will require new seats with the same capacity by using space between them. “We are working on a pretty big reshape of the onboard experience,” Mikosz said. The U.S. route will compete with indirect flights from established players such as Emirates [EMIRA.UL], British Airways and Ethiopian Airlines [ETHA.UL] and test Kenya Airways’ ability to reshape its image from an Africa-focused carrier. “We still have to prove that we can produce an operating profit,” Mikosz said in an interview in his office overlooking airport service hangers. “That is the biggest challenge that we have in an environment where you have a lot of competition.” Twenty five foreign airlines operate out of Nairobi’s main airport, including Turkish Airlines which is expanding in Africa and state-owned Emirates, South African Airways and Ethiopian. Mikosz describes this state-backed competition as his biggest fear as he tries to turn around a publicly listed firm owned 48.9 percent by the government and 7.8 percent by Air France/KLM (AIRF.PA) and attract a strategic investor. “It is really sometimes very frustrating when you see that somebody can have much lower costs thanks to this protected environment and you have to face a real free market economy,” he said. Africa aviation forecast Kenya Airways’ plans mark a shift from a focus on African air passenger demand, which the International Air Transport Association (IATA) sees growing by almost 6 percent a year over the next decade due to increasing economic output and poor road and rail links. Kenya hosts regional hubs for 48 U.S. or U.S.-based businesses like Google (GOOGL.O) and IBM (IBM.N) and the United States is the fastest-growing source of tourists, many changing planes in Europe or the Gulf in more than 20-hour trips. Jan Mohamed, chief executive of TPS Eastern Africa (TPSE.NR), which runs the Serena chain of luxury hotels and safari lodges, said people would pay extra for direct flights, which take about 15 hours. Tickets to New York have begun retailing for around $1,000 return, compared with about $1,500 for an indirect flight. A former executive ...
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