KQ hires Deloitte to champion its recovery plans

Deloitte will comb through the airline’s strategy to find the way forward.

Tuesday February 9 2016

Kenya Airways flight at the Moi International Airport in Mombasa on November 3, 2013. Kenya Airways has commissioned a forensic audit as part of the airline’s turnaround strategy. PHOTO | KEVIN  ODIT

Kenya Airways flight at the Moi International Airport in Mombasa on November 3, 2013. Kenya Airways has commissioned a forensic audit as part of the airline’s turnaround strategy. PHOTO | KEVIN ODIT NATION MEDIA GROUP

By EDWIN OKOTH
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Kenya Airways has commissioned a forensic audit as part of the airline’s turnaround strategy.

The national carrier’s board has appointed Deloitte Consulting to comb through its operations and advise the loss-making airline on how to improve its systems, processes and activities.

The team, which met last week on Thursday, said the move is part of KQ’s turnaround strategy, aimed at stabilising it.

“The objective of this exercise is to identify areas of weakness and give recommendations that will complement the ongoing turnaround strategy. The board will also announce the appointment of a transaction adviser shortly,” it said in a statement.

The heavily undercapitalised firm will rely on the transaction adviser to assist it devise strategic objectives in relation to long-term capital financing.

It was not immediately clear what periods would be covered by the audit, but the airline’s strategic lapses such as the huge fleet expansion plan, called Project Mawingu, are likely to be the focus.

HEAVY LOSS

The heavy plane ownership cost drove the airline to a heavy loss last year, more than doubling to Sh26 billion in 2015 attributed to fleet impairment costs as KQ chose to sell some of its aircraft.

Two out of the seven redundant planes earmarked for sale have already been disposed of. The forensic audit will most likely examine management blunders such as fuel hedging agreements that hit the carrier hard on adjustments costs after petroleum prices fell.

(READ: State seeks to stop KQ pilots’ strike threat from derailing recovery plan)

Key areas KQ auditors may look into include incessant disputes with its principal staff — pilots — which have hurt service delivery and compounded the carrier’s financial woes.

Kenya Airline Pilots Association has revised two ultimatums to have the management overhauled in the turnaround plan and this could be part of the audit focus.

After the loss last year, analysts faulted the airline’s ticketing strategy that set KQ prices higher than other carriers and attributed falling customer numbers to poor customer service.

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