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KQ wise to drop bid for airport takeover

Tuesday September 10 2019

EDITORIAL
By EDITORIAL
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Kenya Airways has done the most logical thing by dropping its plan to take over the Jomo Kenyatta International Airport, a deal it has pushed stubbornly for several months despite stiff opposition from Parliament and various other stakeholders.

That was, arguably, a ridiculous proposal for a loss-making entity that has defied various plans to turn around its fortunes.

It was curious how KQ management would run a complex operation like JKIA when it cannot manage the airline.

The national carrier must now find a winning formula. KQ is a big national asset that has to be pulled out of the rut.

A strategy has to be devised to help it to cut losses, stabilise and return to profitability. KQ has great potential.

In its heyday, the airline ruled the African skies with a string of continental flights and comparable efficiency. Its slogan, “The Pride of Africa”, rang so true.

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FAILED STRATEGY

Today, however, KQ presents a very unfortunate case.

Once a vibrant and profitable enterprise, it has become a basket case saddled with huge losses and debts attributable to poor business decisions.

Among others, it went on a fleet-buying spree as it pursued an ill-advised expansion strategy, getting into routes that did not make economic sense and making losses as it cruised to the new destinations.

With rising loans and debt obligations, KQ resorted to increasing prices to stay afloat, but in the process turned into an expensive airline.

Ticket costs, even locally, became ridiculously high, exposing it to other airlines that charge lower prices.

Add to this the fuel purchasing strategy, where it hedged buying prices at the top dollar and tied itself on long contracts, in the end making heavy losses on currency fluctuations.

ALTERNATIVES

The challenge now is to put KQ back on track. It cannot be allowed to sink.

So far, the Parliamentary Committee on Transport, Public Works and Housing has proposed that the airline be nationalised.

That means the government taking over and managing the company, which includes taking up the debts and all other liabilities. But clearly, that is not an option.

The government has no business running a business. It cannot get into the business or run an airline.

Not when it has failed miserably in many other businesses and where it will be forced to sink in more cash from the National Treasury without probability of redemption.

Let the KQ management think of better alternatives of revival. The airline must take to the sky again.

But into this debate must be included the imperative for retribution. Those who brought the airline to its knees are known and are walking scot-free. We demand that they be seized and made to pay for their sins.

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