Air Transport World

Kenya Airways' uplifting mission: a desire to contribute to the continent's sustainability mixes with a thirst to be No. 1.(Profile)

WHEN KENYA AIRWAYS STARTED describing itself as "The Pride of Africa" following its public share offering in April 1996, it did not do so solely for marketing purposes but also to express a deeply held aspiration to contribute to the sustainable development of the continent.

"Africa has always been looked upon as the 'dark continent'; nothing good comes out of Africa. As we came out of the ashes of East African Airways and the old [state-owned] Kenya Airways, we predicted a situation where we would be a star, a star that would be looked upon by Africa and by the rest of the world," Group MD and CEO Titus Naikuni tells ATW in his office in Embakasi near Nairobi Jomo Kenyatta Airport. "Africa needs to have some pride in what we are and what we want to be, hence the slogan. The fact that an African airline is able to connect over 50 cities is to me a [source of] pride."

The carrier, which was established by the Kenyan government in 1977 following the disbanding of EAA, the airline of the East Africa Community whose state owners comprised Kenya, Uganda and Tanzania, has other things of which to be proud. It was the first African flag carrier to be successfully privatized; it has "the largest and most dense network on the continent," according to COO Bram Steller, and it is one of very few major African airlines to be strongly profitable over the past decade.

Furthermore, in terms of operating (EBIT) margin, KQ has outperformed the industry average in each of the past 10 years (based on IATA data). Its EBIT margin was 7.1% in the fiscal year ended March 31, 2008, and an impressive 13.1% in the previous year. EBIT margin dropped to 5.6% in FY2009 and to 2.6% in FY2010, but this must be viewed in the context of aggregate airline industry EBIT of -1.6% and -0.3% respectively for calendar years 2008 and 2009, according to IATA.

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Although KQ had a net loss in its 2009 fiscal year owing to fuel hedges gone bad--hardly a unique situation--it returned to the black for the most recent fiscal year ended March 31 with a profit of KES2.04 billion ($27.3 million). Group revenue amounted to KES70.74 billion, down just 1.5% on the prior year despite an 11% drop in cargo revenue to KES5.4 billion as a result of the world economic downturn and a two-day strike in August 2009 by cabin crew, ground staff and engineers represented by the Aviation and Allied Workers Union. …

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