Su ATWOnline di oggi c'è un'analisi approfondita farcita d'intervista fiume sul passato presente e futuro della compagnia kenyota. Molto interessante perchè offre anche uno spaccato della situazione critica africana, almeno di certe zone del continente, che noi diamo per assodate o scontate in Occidente (come il doversi costruire a proprie spese in alcuni aeroporti i desk-uffici della compagnia).
Interessante anche che il 52% del fatturato della compagnia venga dall'Africa e di questo solo il 4% dal Kenya. Si intuisce la propensione ai transiti, in un continente che a sud del Sahara non ha grandi alternative (forse ET, SA).
Anche l'Europa comunque ha un peso importante con il 27% del revenue totale.
Kenya Airways’ Uplifting Mission
By Cathy Buyck | November 1, 2010
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 ATWin 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.
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. (Despite a generous settlement that included a 10% pay raise backdated to July 1, 2008, and new staff allowances, the union threatened another strike two months ago.)
Results for the first half of the current fiscal year were not available when this article was being written and KQ was not permitted to comment on the loss sustained in the fiscal first quarter ended June 30 owing to stock market regulations, but Naikuni is upbeat about the full year: “We see an improvement in passenger numbers and yields. We expect to report net earnings that are higher than last year’s.” Passenger numbers are budgeted to increase about 12% from the 2.9 million it carried last fiscal year.
“We lowered yield a bit last year, but it is company policy not to sell below seat cost. We prefer yield over loads any day,” Commercial Director Mohan Chandra maintains. “We made money last year, so we must be doing something right.” Yield in FY2009-10 dropped 5.3% on the prior year in 7.94 cents (KQ uses the US dollar as standard for its revenue/RPK) but lifted 1.9% in local currency primarily owing to the weaker Kenyan shilling in the period. CASK was a very acceptable KES3.81 (4.97 cents) and RASK was KES5.18 (6.75 cents).
Naikuni attributes much of the credit for KQ’s steady profit record to its private ownership. “I have a gun [to] my head to deliver,” he laughs, adding: “In contrast to some other carriers, also in the Western world, we do not have a government to go back to and ask for money.” KLM, a unit of Air France KLM Group, became KQ’ strategic partner prior to its IPO and is still the largest shareholder with 26%. The Kenyan government holds 23%. The public float is cross-listed on the Nairobi Stock Exchange, the Uganda Securities Exchange and the Dar-Es-Salaam Stock Exchange. “We went back to our origins but through the door of privatization,” he comments.
Dominance
The airline experienced rapid growth during the first part of the last decade, with passengers almost doubling from 1.4 million in 2001 to 2.4 million by FY2006-07. RPKs increased from 3.7 billion to 6.64 billion over the period and its fleet grew from 13 aircraft to 23 serving 38 destinations in 30 countries. Following the fatal crash of a 737-800 in Douala in May 2007 in which all 114 passengers and crew onboard were killed, plus widespread rioting and domestic violence after the December 2007 general election, KQ opted “to consolidate and focus its attention to training and IT,” according to Steller. It invested in a new Operation Control Center and what it calls the Pride Center, a state-of-the-art training and development complex that also houses a Virtual Procedures Trainer facility for its pilots. The initial phase was developed at a cost of KES1.3 billion in cooperation with Boeing and the second phase became operational in September with a full flight 737 simulator.
In terms of sales and distribution projects, it recently switched from KLM’s former in-house sales and reservations system Corda to Amadeus Altea and is implementing the PROS Revenue Management System. It also is integrating Sabre’s Crew Management, Movement Control, Flight Planning and Weight & Balance applications across its operations and hub control systems.
“Titus wants more than ‘locally compliant’ practices. He wants international standards and procedures throughout the airline,” Steller affirms. Its first IOSA certificate was obtained in 2005 (the first carrier in sub-Saharan Africa certificated) and this year its ground handling unit was ISAGO certified.
Kenya Airways—commonly called KQ in Nairobi—returned to growth mode last year, opening seven new stations in Africa and increasing frequencies on 11 routes, Steller says. He reveals that management has a “very ambitious growth plan” to launch a new destination every month for the next three years. “We want to fly to each capital in Africa, add more destinations in Europe and Asia and commence operations to Latin America.”
Sao Paulo is earmarked as its first Latin American destination, Kuala Lumpur is a possible addition in Asia and Istanbul Ataturk could be incorporated in its European network. It is hoping to start flights to Jeddah as soon as it gets regulatory approval. North America is not on its “red map” for 2013. Traffic to/from the US is being channeled through the hubs of strategic shareholder KLM and its affiliate Air France. KQ and KLM have a profit- and revenue-sharing joint venture on the NBO-AMS route, which will be extended to other African destinations such as Kigali in the near future.
The carrier achieved its milestone goal of serving 50 destinations in August when it commenced twice-weekly flights to Luanda, lifting total weekly frequencies to 746 aboard a fleet of 29 aircraft. Since then it has added Nampula in Mozambique and Ouagadougou in Burkina Faso, with service to N’Djamena in Chad commencing on Nov. 10. It will re-launch domestic service to Malindi in December, the same month that Rome Fiumicino comes on line.
Of the 55 destinations it will be serving at that point, 45 are in Africa, six in the Middle East/Asia and four in Europe: Rome, AMS, CDG and London Heathrow. It has secured two additional slots at LHR through its SkyTeam partners, enabling it to increase frequencies to nine per week for the 2010-11 winter schedule. It became an associate member of SkyTeam in 2007 and a full member in July.
“We will have 55 or 56 destinations by the end of the [fiscal] year,” confirms Chandra, who was COO for Emirates Post Group before joining KQ last year. “We want to be the dominant carrier of Africa,” he proclaims. More than 50% of revenue is generated in Africa—4% in Kenya and 48% in the rest of the continent. Europe contributes 27%. Some 80% of its sales come through travel agents.
“In essence our strategy is to cover every capital city in Africa and link them up via Nairobi,” Naikuni says, adding that a stretch goal would be to bypass Nairobi and offer direct services on some routes. “We are not ignoring the rest of the world,” he insists, but the primary focus is on Africa. “Africa is the world’s second-largest continent with a population of 1 billion; this is comparable to China’s and India’s. Yet it is having difficulties communicating within itself—even by telephone. Roads are not good and railroads are not good, so you need air transport. The potential is big.”
Challenges
Running an airline in Africa is “extremely challenging” owing to things like high airport and landing fees and insufficient or inadequate infrastructure, Naikuni says. “We encounter the same issues but in different ways in different countries. Some airports don’t have office space and we have to build it ourselves, at our expense. We opened a route to Kisangani Bangoka International [in the Democratic Republic of Congo] but there was no firefighting equipment so we had to buy that at our cost.”
Owing to the poor state of the runway at Lubumbashi International, damage to aircraft tires is common and leaving a pair of reserve tires in the office at FBM is “unwise,” Steller grins, “so we store them safely in the hold of our 737 that we deploy on the route.”
Operating at NBO, where KQ maintains a hub, is a textbook example of the complexities faced by airlines in Africa. The airport was designed in 1978 for point-to-point traffic with a passenger capacity of 2.5 million annually. Its current throughput is about 5 million, which puts additional demand on the infrastructure. “At our main morning peak, 28 of our aircraft and four [belonging to] our partner Precision Air transit NBO in less than three hours; we just have eight contact gates. On average we transfer five checked bags per passenger,” Steller sighs. KQ holds 49% of the Tanzanian carrier.
“The upgrade of the airport is a prerequisite for our continued success,” Naikuni warns, recognizing that competition is increasing on all fronts, including from Kenyan LCCs and Persian Gulf-based carriers but mainly from neighboring Ethiopian Airlines that was invited into Star Alliance in September and enjoys an equally strategic location on the continent. “Look at Ethiopian’s hub; the government has invested tremendously in Addis Ababa Bole International. It is a fantastic airport,” he admits.
15 Checked Bags
Following on a 6.7% hike in ASKs to 12.14 billion in FY2009-10, capacity is planned to grow 12.3% this year on higher aircraft utilization and the addition of two former KLM 737-300s, two Embraer 170LRs and two new E-190s leased from Jetscape. The E-170s arrived in July, the 737s in June and September, and the first E-190 is expected in December (see table, opposite page).
The ex-KLM 737s are on five-year leases and thereafter will come onto the KQ balance sheet, Steller says, indicating that there might be scope for more KLM aircraft in the future. “We will need more narrowbodies and more E-190s. Possibly we will take the NGs new,” he says.
Turning to the widebody fleet, at the end of September it comprised four 777-200ERs and six 767-300ERs. On backlog are nine 787s with three more on option. The Dreamliner order is a sore spot with Steller and Naikuni. KQ placed its original commitment for six firm and six option 787s in March 2006 (subsequently adjusted to nine and three) and its first two should have arrived in September. Now they are scheduled for “around 2013,” Naikuni says. He is candid about his displeasure with the series of delays and confirms that the airline is considering cancelling the order. KQ entered into discussions with Airbus regarding taking A330s as a substitute for the 787-8s several months ago and, “We will take a decision [on whether to] go with Airbus or stay with Boeing before the end of the year,” he says. Its fleet is a combination of operating leases and ownership.
KQ operates all its aircraft, including the RJs, in a two-class configuration. Its widebodies and 737s offer a comfortable 32-in. seat pitch in economy and its 777s have fully lie-flat seats in business class. It maintains a full-service concept with complimentary meals and drinks, and a very generous baggage allowance.
On routes not touching Europe (where the maximum legal limit is 23 kg. per bag) it allows baggage weighing up to 32 kg. On certain routes, e.g., Lagos-Asia, and depending upon the aircraft type, passengers are allowed to check up 15 pieces of luggage at a surcharge that is lower than the standard excess baggage rate and higher than the normal cargo rate.
“Traders want to travel with their goods. It also allows them to strike a deal with customs,” Steller explains. “Certain economies in Central and West Africa rely on these goods. They cannot wait till the import papers are cleared by officials,” he adds, concluding that the flexible approach is part of KQ’s “core mission and Titus’s mantra to contribute to the sustainable development of Africa.”
http://atwonline.com/airline-finance-data/article/kenya-airways-uplifting-mission-1028
