Kenyan Air­ways Faces Rougher Skies as Zam­bia, Uganda and Tan­za­nia Re­vive Na­tional Car­ri­ers

Zambian Business Times - - FRONT PAGE -

KENYA Air­ways is star­ing at a pos­si­ble loss of its re­gional mar­ket share fol­low­ing the planned re­vival of na­tional car­ri­ers in Uganda, Tan­za­nia and Zam­bia. Kenya Air­ways, pop­u­larly known by the code KQ, has been en­joy­ing a big pres­ence in these coun­tries cap­i­tal­is­ing on lack of na­tional air­lines.

Air Tan­za­nia is wel­com­ing a new air­craft- Bom­bardier Q-400, which is the third since Pres­i­dent John Magu­fuli rose to power, in an ef­fort to re­vive the ail­ing air­line.

The air­line has also lined up three more jet air­craft, in­clud­ing two Bom­bardier C300s and one Boe­ing 787-8 Dream­liner to ar­rive in the coun­try be­fore the end of this year.

Uganda is also in the process of re­viv­ing its na­tional air­line be­fore the end of the year af­ter the cab­i­net ap­proved the plan.

This will cut the 15 years dom­i­nance that KQ has been en­joy­ing at En­tebbe which might re­sult in rev­enue loss as Uganda seeks to claw back re­gional routes to kick-start an am­bi­tious global out­reach.

Kenya’s Trans­port Prin­ci­pal Sec­re­tary Paul Maringa, how­ever, says the move will not af­fect KQ’s earn­ings as part of the ef­forts to re­vive the lo­cal air­line are aimed at mak­ing it com­pet­i­tive in the re­gional mar­ket.

“There will be in­creased com­pe­ti­tion ob­vi­ously, but this does not mean it will af­fect the op­er­a­tions of KQ. We are bank­ing our strength on the ser­vices that we of­fer, which will keep us go­ing even in the pres­ence of stiff com­pe­ti­tion,” said the PS.

Prof Maringa said there is noth­ing wrong with com­pe­ti­tion, adding that what mat­ters is how ef­fec­tive Kenya Air­ways will be in han­dling the sit­u­a­tion.

“KQ re­mains dom­i­nant in most routes and we have a good part­ner­ship in Europe. We are also bank­ing on the di­rect flights to the US sched­uled to start in the next few months to re­main the most pre­ferred re­gional air­line,” he said, adding that KQ good brand will give it an edge in the wake of com­pe­ti­tion.

Ethiopian Air­lines, ar­guably Africa’s most prof­itable ca­reer, is also fo­cus­ing on re­viv­ing some of the stalled air­lines in the re­gion. The air­line has ac­quired a 45 per cent stake in Zam­bia Air­ways that is set to be re-launched af­ter more than two decades.

Un­der the pact, the Zam­bian gov­ern­ment will be the ma­jor­ity share­holder with a 55 per cent stake.

KQ has at least four daily flights to Dar – es - Salaam, five to En­tebbe, four to Lusaka Zam­bia and at least one more other daily flight to Liv­ing­stone ( Zam­bia). Ethiopian Air­lines is also seek­ing to set up hubs in south­ern Africa, Cen­tral Africa and the Horn that con­nect neigh­bour­ing coun­tries.

Ac­cord­ing to the air­line, it is work­ing with Malawi and Zam­bia as south­ern Africa hubs. An­other hub would be in cen­tral Africa, cov­er­ing the Demo­cratic Repub­lic of Congo, Congo Braz­zav­ille and Chad.

For­mer KQ chief ex­ec­u­tive of­fi­cer Mbuvi Ngunze said in 2016 that their fo­cus was on African routes, which was prov­ing to be prof­itable.

“We pre­fer in­creas­ing fre­quen­cies in the cur­rent des­ti­na­tion other than growth to oth­ers. Our fo­cus is clearly Africa and we can see the strat­egy in Africa has started pay­ing div­i­dends,” said Mr Ngunze then.

The Kenya Air­ways’ share­holder value moved into pos­i­tive ter­ri­tory rid­ing on last year’s bal­ance sheet re­struc­tur­ing that re­duced its an­nual debt pay­ment obli­ga­tions, leav­ing room to re­vamp its op­er­a­tions.

KQ’s eq­uity po­si­tion stood at Sh417 mil­lion in the nine months be­tween April and De­cem­ber 2017 com­pared to neg­a­tive Sh45 bil­lion in the year to March 2017, ac­cord­ing to a fi­nan­cial re­port that was re­leased last month.

The change in for­tunes fol­lows a com­plex re­struc­tur­ing of the busi­ness that saw Kenya Air­ways main cred­i­tors — 10 com­mer­cial banks and the gov­ern­ment — con­vert Sh44.2 bil­lion loans into eq­uity to save it from to­tal col­lapse.

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