Kenya Airways regained profitability in the year 2009/10 despite the difficult economic climate. During the year ending 31 March 2010, KQ made an operating profit of $24m. This was a remarkable achievement given the economic downturn experienced during most of the financial year. The capacity deployed increased by 6.7 percent largely driven by new destinations launched, while passenger traffic remained at prior year levels. The 2009/10 financial year was a bountiful one for the company’s shareholders, as the board declared a first and final dividend of $0.013 per share. This represents a total dividend payment of $6m.
The airline expects a more positive financial year to March 2011 given the global economic recovery. Management has put in place appropriate strategies to enhance growth, efficiency and profitability and at the same time ensuring that customer convenience and travel experience is not compromised.
The introduction of the money transfer service M-PESA – which will improve the ticket purchasing process for customers – and the KQ-Msafiri Gold credit card will also have a positive effect on the business. Management will continue to adopt new methods that will improve the efficiency and profitability of the company for the benefit of all stakeholders. In addition, the continued expansion of the network is bringing in extra revenue, with most of the new routes already contributing positive margins, thereby improving the utilisation of the company’s assets.
Stakeholder communication
With over 75,000 shareholders among Kenya Airways’ stakeholders, it is imperative that the airline communicates to the owners and other stakeholders, including and not limited to customers, bankers, suppliers, governments and other industry regulators. The purpose of the constant flow of financial and statistical information is to enable stakeholders to make informed decisions and to comply with regulatory bodies within the industry, governments and others. But with such variety in its stakeholders, the airline faces a tough challenge presenting data that is accurate, meaningful and actionable to everyone who receives it. Such challenges include:
– Complying with the diverse regulatory requirements in the different countries that KQ operates;
– Language barriers for the target audience;
– Complex industry terminology;
– Confidentiality agreements; and
– Commercial sensitivities due to competition.
Recognising the need for openness and transparency in its financial reporting, KQ communicates to stakeholders as follows:
– Quarterly press and KQ website release of operating statistics;
– Half year business and financial review report to the media, capital markets and KQ website;
– Half year investor and media briefing event with Q&A;
– Year-end business and financial report to the internal press, bourses in Kenya, Uganda and Tanzania and relevant Capital Market Authorities in the region;
– Annual general meeting, around September of each year, where the results are presented primarily to shareholders; and
– Periodic airline statistics release to governments and regulatory bodies in the region.
Network expansion
Kenya Airways management is continuously investing in fleet modernisation and development; it has already taken delivery of two Embraer 170 jets and expects one Embraer 190 later in the year. Kenya Airways will also have acquired two 737-300s by the end of the current financial year.
Kenya Airways has embarked on an aggressive route expansion strategy geared at giving customers more connection options. Since last year the airline has launched eight new routes. Kenya Airways today serves about three million passengers annually and flies to 50 destinations worldwide – 41 of which are in Africa. The airline covers over 70 percent of the African continent.
The latest destinations launched include Brazzaville, Libreville, Gaborone, Ndola, Malabo, Bangui and Kisangani. This year the airline has launched a Muscat route and also now serves Juba and Luanda in Angola.
By opening the new routes, KQ is expanding the opportunities for investors to and from Africa as well as increasing options available to tourists visiting the continent. To back up the ambitious route expansion plans and improve the quality of service delivered to customers, the airline has also embarked on training of its staff at its Pride Centre. The airline currently has a workforce of over 4,200 employees of which over 340 are pilots in charge of over 80 daily flights.
Kenya Airways has also signed a Code Share Agreement with several African airlines including Nigerian Eagle Airlines and Zambezi Airlines to strengthen its presence and increase market share in West Africa and Southern Africa. The agreement offers customers extended travel and better connection options in West, East and Southern Africa.
CSR and sponsorships
Education, water, health and environment remains KQ core focus areas in its CSR activities. The following projects were completed successfully during the 2009/2010 financial year.
Education
In line with the “Adopt a School” initiatives, KQ supported a number of schools.
a) Mangu High School in Thika, Kenya was supported through the construction of a computer class at a cost of $9,150.
b) Ikuu Girls Secondary and Special School in Chuka, Kenya was supported through the construction of a dining hall costing $15,850.
c) Esupetai Primary School in Narok, Kenya was supported through the construction of two classrooms, a perimeter fence and the installation of a water tank at a cost of $20,800.
d) Kasagam Secondary School in Kisumu, Kenya is a repeat beneficiary; this year support was through the construction of a computer lab costing $24,400.
e) Kasarani Tree Special School in Nairobi, Kenya was supported by the construction of a carpentry workshop costing $24,400.
Water
With an aim to develop sustainable, safe and adequate water supplies in vulnerable rural communities across Africa, KQ supported the following projects during the period.
a) Gaigedi Community in Vihiga, Kenya by sinking a borehole in Gaigedi Secondary School and installation of a holding tank at a cost of $24,400.
b) Epworth Community in Harare, Zimbabwe by sinking a borehole near the community centre and installation of a holding tank at a cost of $22,000.
Environment
The Plant a Future campaign saw a reconsolidation of the area where KQ has been planting indigenous trees since 2007. This year it replaced 90,000 seedlings that were affected by a long drought and planted an additional 30,000 indigenous seedlings. This project has so far accomplished a total number of 500,000 indigenous trees.
Health
“Bombay Ambulance” initiative provides support for needy patients travelling overseas for medical treatment. The number of discounted tickets provided to needy patients who travelled for medical treatment stood at 44 to Mumbai, two to Amsterdam, and one each to Cairo and London. The company also supported the following initiatives:
a) The Haiti earthquake disaster victims’ relief support project in partnership with the Red Cross between 4 – 28 February 2010 involved collecting cash in the form of loose change from passengers in-flight. The project netted a total of $6,000.
b) Uganda landslide victims: a donation of food worth $7,300 was trucked to Eastern Uganda.
c) The AMREF/Rotary “Changing Lives” project has so far collected $20,000.
As a leading African airline, Kenya Airways has created an opportunity for development by opening up Africa to the world (and vice versa). The company now sees its core purpose as creating sustainable development across Africa. To achieve this purpose, there is a need to foster global partnerships with key stakeholders and ensure peace and security through various initiatives. Kenya Airways is in the process of signing a memorandum of understanding with the United Nations Environmental Programme in a bid to promote environmental awareness and improve education in this area. Kenya Airways has a gallant plan of planting half a million trees every year in an effort to enhance environmental conservation.
The company’s commitment to African peace is evidenced by its partnership with the African Union Commission under the umbrella of the 2010 Year of Peace and Security in Africa. Under this agreement, Kenya Airways will provide communication and financial support to the Make Peace Happen campaign, thereby contributing towards the achievement of its objectives. Kenya Airways is the first airline in Africa to respond to the call by the African Union Commission to the African airline sector to partner with it on the implementation of the Year of Peace and Security programme.
It also recognises the power of sports as an effective unifier, bringing together tribes, nations and people. As such the company is associated with the Tegla Lorupe Foundation Peace initiative, a cause initiated by renowned women’s world marathon champion Tegla Lorupe to help forge peace between the warring communities in Kenya, Uganda and South Sudan, which are constantly engaged in cattle rustling conflicts.
The airline is committed to being Africa’s development partner, creating opportunities that fully exploit its potential; especially among the youth that embody the future of the continent. The KQ brand embraces sponsorships as a key avenue for connecting the brand and customers across the network, thereby building brand affinity and loyalty for Kenya Airways. One of KQ’s major sponsorships is that of Kenya’s National Sevens Rugby Team, at a total cost $200,000 per annum. This sponsorship exposes the KQ brand to rugby fans across the globe at the intercontinental World Sevens Rugby circuit, where the Kenya team plays adorned with the Kenya Airways colours.
