Kenya Airways needs to get it right this time

The National Treasury has disclosed that it has directed Kenya Airways to hire a consultant that will help the national flag carrier to onboard an equity investor.

The process of getting an investor is expected to be complete by June this year and with cash injection from the investor, the airline is expected to make another serious stab at turning around its operations. This is welcome.

However, KQ must ensure that gets it right especially at the initial stages of onboarding the consultant which, according to Treasury, was expected to have been completed by December last year.

KQ must get it right this time because its past attempts to get strategies from consultants that would put it on a profit trajectory appear not to have yielded the desired results.

Among the consultants that KQ hired was America's Seabury Group in 2022 which was expected to advice the company on the restructuring exercise. In 2021, it had contracted Steer Group also to craft a plan to enable the airline flies out of the challenges it had experienced in 2020 when it was heavily affected by the Covid-19 pandemic as well as to lay ground for future growth and expansion.

KQ had also tasked McKinsey, another US firm, to come up with a strategy that would help to turn it around. The contract was, however, terminated after one year but saw KQ spend Sh2.3 billion. There were concerns the airline did not get value for money.

But there is a second and important reason why KQ must get it right. The Kenya Kwanza administration from the outset said it would not offer budgetary support to KQ post-December 2023 and Treasury recently confirmed that.

Notably, Treasury has severally advanced shareholder loans to KQ, some of which have been used to run day-to-day operations. The government has at the same time taken over some of KQ’s debts. But that's about to come to an end and KQ will be expected to fly on its own.

For these and other reasons, the airline should ensure that the consultant recruited to help it get an equity investor earns their keep and that the process and strategy formulated leads to selection of a worthwhile investor as well as a concrete turnaround plan.

KQ sunk into a net loss of Sh21.7 billion in the half year to June 2023. It however projected optimism noting that despite the losses that it attributed to foreign exchange volatility, it had made an operating profit for the first time in six years, which stood at Sh998 million in the six months to June this year from a loss of Sh5 billion last year.

KQ needs to shore up that optimism and that can only happen if it gets it right now. For despite the problems that the airline faces, it remains key to Kenya’s economy. As a major player in the local and regional aviation sector, it feeds into many sectors such as tourism, agriculture, manufacturing and even small-scale traders who import and export goods.

It is therefore in the interest of the entire country that KQ remains afloat—and the pride of Africa. That can only happen if the latest attempt to give it a new lease of life bears fruit.

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