Auditors reveal turmoil in KQ built up over years

The CEO of PWC Ann Erickson swears by the Bible at Parliament Buildings when she led a group of her officers to appear before Senate Select Committee on Kenya Airways to discuss the Financial position of the airline. [PHOTO: MOSES OMUSULA/STANDARD]

There were strong indicators that the national carrier, Kenya Airways, was headed for a major financial crisis before it posted the historical Sh26 billion loss, auditors who were looking into the company's financial accounts have disclosed.

Auditors from PricewaterhouseCoopers (PwC), who were the company's auditors for four years since the 2010-2011 financial year and their predecessors Deloitte and Touche, yesterday told the Senate committee looking into the airline's woes that there were signs the company was heading towards serious financial turbulence.

The auditors revealed that while the company's fortunes looked very positive in 2011 resulting in the ambitious expansion programme dubbed Mawingu, which saw it acquire a fleet of dreamliners, a red herring was spotted.

A partner at PwC, Richard Njoroge, said the effects of the Euro-zone crisis in 2012 and the political turmoil in the Middle-East within the same year, markets that the airline was successfully penetrating, was the beginning of signs that all would not end well.

"This huge loss this year has shocked everyone, but I would say it did not just happen. It has been building up over years," said Mr Njoroge.

He told the committee chaired by Kisumu Senator Anyang' Nyong'o that the challenges of travel advisories contributed largely to the loss of markets in the West combined with the rise in fuel prices.

Dr Nyong'o said: "Fuel was the issue in 2012, retrenchment of employees was not likely to help them save much."