KQ can weather current headwinds and regain the pride of Africa tag

Debt is one of the legacy challenges that has confronted every CEO and shareholder of KQ. [Omondi Onyango, Standard]

The Nairobi Expressway, which is nearing completion, will be one of the lasting legacies of President Uhuru Kenyatta’s government like the Thika Superhighway for his predecessor Mwai Kibaki.

Not far from the expressway is the Jomo Kenyatta International Airport, the hub for Kenya Airways (KQ) - “the pride of Africa.” A candid interview with the chief executive Allan Kilavuka gave some insights into what ails the airline and his dreams for the future. 

“The airline has been plagued by legacy issues, which gets more focus than the fact that in its 45+ years of existence, the airline has never missed taking to the sky. Its resilient workforce sometimes goes unnoticed,” said Mr Kilavuka in a recent interview.    

“There have been efforts to make KQ a more sustainable business. For example, it’s envisaged that by 2027, you could start worrying about ‘air jams’ as air taxis start clogging our airspace. 

“You will be able to fly to your destination from your home or office just as we currently do with our helicopters. The air taxi, a KQ project will be a game-changer in mobility and a new status symbol. Whether it is official business or leisure, the dream of flying without going to the airport could be realised. We have postponed it for too long.” 

Drones, he added, will become a major revenue stream for KQ as companies like Kenya Electricity Transmission Company (Ketraco) or KenGen start using the new technology for surveillance.

Drones use is still in its infancy, but there are also opportunities in crop spraying, police patrols, delivering crucial medicine (it’s already in use in Rwanda) to flowers on Valentine’s Day.

Kivaluka said Fahari Aviation is the new vehicle for spawning such futuristic innovations. While not divulging further information, he said 13 prospective ideas are in the pipeline.

He smiled broadly when I suggested they should be patented. Small and Medium Enterprises (SMEs) could be a great source of ideas for KQ through Fahari Innovation Hub. Do you have an idea that can help KQ? Why not visit Fahari? 

Carrying out repairs and maintenance for other airlines is another revenue stream for the airline, which has a legacy of skills in this area.

KQ already maintains aircraft for other airlines. The safety standards in the industry make maintenance a key and possibly a profitable component. Add the cargo business, which did well at the height of the Covid-19. The future of KQ goes beyond the aircraft. What of a Pan African airline to finally actualise the dream of pan Africanists like Jomo Kenyatta and Kwame Nkrumah?  

Kivaluka opines that if we can overcome our geopolitical differences, we can build a continental-wide airline to compete with other global airlines.

KQ chief executive Allan Kilavuka. [Jonah Onyango, Standard]

We can ride on The African Continental Free Trade Area (AfCTA) and Africa Union’s (AU) Agenda 2063. With a hub in South Africa, another in Kenya and one in West Africa, the resulting connectivity would catalyse Africa’s economic growth. This will not happen without demystifying flying, which 115 years since the invention of the aeroplane, is still seen as a preserve of a chosen few.

Demystifying flying will create new markets and invigorate airlines. Can we start with a functional airport in every county? Can we reduce taxes on airline tickets to catalyse growth in this sector?  

The present reality of KQ includes debts to supplies and loans that amount to about $750 million (Sh85.9 billion).

Debt is one of the legacy challenges that has confronted every CEO and shareholder of KQ. The government is injecting Sh20 billion into the airline to keep it running as it plans its turnaround headed by a consulting firm Seabury. The money, however, has conditions attached.  

The bailout has been controversial and is seen in some quarters as a reward for inefficiency. But KQ is not the only airline that got a government bailout. Covid-19 led many governments to bail out their airlines and other sectors. 

For example, in June 2020, the government of France and the Netherlands pumped $10.8 billion (Sh1.2 trillion) to salvage Air France-KLM from the ravages of the coronavirus pandemic.

In August 2020, Emirates received $2 billion (Sh229 billion) from the government of Dubai as the toll of the pandemic spread. In August 2020, Qatar Airways also received a similar amount from the Qatari government.

These airlines and many others globally that received government bailouts show the importance that governments attach to their national carriers.

They are just not a profit centre but a key asset and catalyst for socio-economic development. In its turnaround, KQ has to deal with internal issues like optimisation of fleet and staff, social partners and the productivity of its staff.

Productivity also focuses on networks, routes and scheduling. We expect the national carrier to eventually improve its balance sheet and reduce liabilities, leading to sustainable profits.